Andrew R. Bisignani, Tax Fraud, Massachusetts 2023

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Table of Contents

Tax Evasion and Fraud Sentencing

BOSTON – In a shocking tale of corporate deceit, the co-owners and former owner of a Worcester payroll company, Harpers Data Services, have been sentenced for defrauding the IRS and tax evasion. The scheme, which lasted over a decade, resulted in a staggering $5.55 million in unpaid taxes.

At the center of the scandal are William McCullough, 73, of Westborough, Mass., and his son Robert McCullough, 43, also of Westborough. The duo, who operated the payroll company, funneled approximately $11 million of taxable income into two corporate bank accounts at Webster Five Cents Savings Bank. The income was never reported to the IRS, and the company failed to pay approximately $3.78 million in taxes.

The McCulloughs’ scheme also involved embezzling client and employee funds, with William McCullough writing checks totaling approximately $4.7 million to himself, his son, and Gary Davis, a former owner and president of Harpers. He also wrote bonus and dividend checks totaling approximately $2.7 million to himself, his son, and Davis. The defendants failed to pay approximately $1.7 million in taxes from 2007 through 2011.

In a separate case, William McCullough was sentenced for committing wire fraud. From 2009 through 2011, Harpers maintained client trust accounts and a client tax account, which contained client funds to be used to pay employees’ paychecks and federal and state taxes. William McCullough took approximately $1 million from the client trust accounts and deposited it into a Harpers account. He also took $750,000 from the client tax account and deposited it into a Harpers account, resulting in a theft of approximately $1.8 million.

The case was prosecuted by Assistant U.S. Attorney Karin M. Bell, Chief of U.S. Attorney Carmen M. Ortiz’s Worcester Branch Office. The investigation was led by the Internal Revenue Service’s Criminal Investigation in Boston and the Federal Bureau of Investigation, Boston Field Division.

The sentences handed down by U.S. District Court Judge Timothy S. Hillman include: William McCullough to one year and one day in prison, three years of supervised release, and restitution of $1,825,933; Robert McCullough to eight months in prison and three years of supervised release; and Gary Davis to six months in prison and three years of supervised release.

The sentencing marks the end of a long and complex investigation into the payroll company’s activities. The case serves as a reminder of the importance of corporate accountability and the severe consequences of tax evasion and fraud.