Scrap Metal Business Owner Pleads Guilty to Tax Evasion

In a shocking turn of events, Joseph Lee Scott Deardorff, 31, of Kansas City, has pleaded guilty to tax evasion, a charge that could land him up to five years in federal prison without parole.

Deardorff, the owner of Total Recovery and Recycling, LLC, a scrap metal business that operated primarily on a cash basis, admitted to willfully and intentionally evading payment of $355,310 in federal income taxes for tax years 2007 through 2012. According to the plea agreement, Deardorff earned $194,067 in taxable income in 2011 and owed $65,067 in federal income tax that year.

However, Deardorff took a series of steps to conceal and attempt to conceal from the IRS the nature and extent of his assets. For example, he cashed approximately $731,656 of the $736,070 checks he received from the sale of scrap vehicles and scrap metal in 2011 at multiple different gas stations and check cashers throughout the metro area of Kansas City, Mo.

Deardorff then used that cash to purchase additional scrap vehicles and scrap metal in an effort to hide the money he received from the sale of vehicles and metal from the IRS. He also used cash from the sale of scrap vehicles and scrap metal to purchase multiple properties for business and investment purposes, multiple Corvettes for investment purposes, and high-end GPS units, speakers, CD players and DVD players for his tow trucks.

Furthermore, Deardorff admitted that he failed to file Forms W2 for any of his employees for calendar year 2011, instead paying them in cash. This egregious act of tax evasion has left many wondering how Deardorff was able to operate his business with such blatant disregard for the law.

The case is being prosecuted by Senior Litigation Counsel Gregg R. Coonrod and was investigated by IRS-Criminal Investigation. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.

As the investigation unfolds, one thing is clear: Deardorff’s actions will have serious consequences for his business and his future. The question remains, how far will his guilt take him in the eyes of the law?

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