Following her April conviction for conspiracy to defraud the U.S. government and to obstruct the Internal Revenue Service (IRS), Massachusetts resident Catherine June Floyd has been sentenced to five years in prison. She has also been ordered to pay $3 million in restitution for the damages caused by her tax fraud schemes.
Tax Fraud Schemes Involving About $30.5 Million Send Multiple Defendants to Prison
Ms. Floyd was convicted of tax fraud along with William Scott Dion and Charles Adams. All three were convicted of conspiracy to defraud the IRS through promoting an “under the table” payroll scheme. The defendants used a payroll tax scheme to pay employees “under the table” to avoid withholding and paying over payroll taxes. They actively promoted the payroll tax fraud scheme and ran the scheme through three entities: Talent Management, Contract America, and New Way Enterprises. About 150 individuals enrolled in the payroll scheme and more than $2.5 million in compensation and wages ran unreported through the system.
Ms. Floyd and Mr. Dion were also convicted of conspiracy to defraud the IRS through use of an “underground warehouse banking” scheme intended to conceal their customers’ income and assets from the IRS. The warehouse banking scheme was run through three separate entities: Office Services, Your Virtual Office, and Calico Management. This tax fraud scheme used accounts at several different banks to deposit and commingle subscribers’ business funds to mask the ownership of the funds. Over $28 million were routed through the bank accounts used in the tax fraud scheme.
According to the Justice Department, Mr. Dion was sentenced to seven years in prison and was ordered to pay $3 million in restitution.
Whistleblowers Can Help Authorities Stop Tax Fraud
Whistleblowers are in a unique position to help authorities in identifying and halting tax fraud. The Tax Relief and Health Care Act of 2006 provides that under certain circumstances whistleblowers are eligible for financial awards from the IRS Whistleblower Office, ranging from 15 to 30 percent of the total amount recovered by the IRS.
Anyone with information about fraud can make a difference as a whistleblower. Learn more about your legal rights as a whistleblower under the Tax Relief and Health Care Act by consulting with a whistleblower attorney at Waters & Kraus. Contact us or call our attorneys at 800.226.9880 to learn more about our practice and how we can assist.
