Richard Floyd Tatum Jr., Employment Tax Evasion, Texas 2013

A Houston, Texas businessman has been brought to justice for his role in one of the largest employment tax evasion cases in recent history. Richard Floyd Tatum Jr., 57, pleaded guilty to one count of failing to pay over employment taxes, totaling approximately $18 million, taken from his employees’ wages.

According to court documents, Tatum owned Associated Marine & Industrial Staffing Inc. (AMI), an industrial staffing company that provided temporary labor to businesses in Texas and other states. Tatum employed approximately 1,000 people, including internal employees and external employees assigned to work on-site at client locations.

Tatum was responsible for collecting, accounting for, and paying over to the Internal Revenue Service (IRS) the payroll taxes withheld from AMI’s employees’ wages. However, instead of paying the taxes, Tatum used the funds for his personal benefit, including making payments on his ranch and traveling to Las Vegas, Hawaii, and France.

From March 2008 through December 2009, Tatum filed false and untimely employment tax returns for AMI that did not report AMI’s external employees. In May 2013, Tatum filed untimely returns for the quarters ending in March 2010 through December 2012, reporting AMI’s external employees but failing to make any payments.

Tatum withheld approximately $12 million in payroll taxes from March 2008 through December 2012, which he did not pay over to the IRS. He also failed to pay $6 million of AMI’s contributing share of social security and Medicare taxes during the same quarters.

“Rather than pay over to the IRS his employees’ withholdings and social security and Medicare contributions, Richard Tatum diverted the funds to his personal benefit,” said Acting Deputy Assistant Attorney General Stuart M. Goldberg. “Employment taxes are not a source of funding for ranches or premium travel — those who keep these funds and use them as a personal piggybank will be prosecuted and face incarceration.”

Sentencing is scheduled for June 1. Tatum faces a statutory maximum sentence of five years in prison, a period of supervised release, restitution, and monetary penalties.

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