Wednesday, November 3, 2010

PaySource IRS Fraud, Wow!


Dayton Daily News reporter, Lou Greico has the story on the massive fraud by officers of PaySource payroll services which is located in Dayton--with the arrest of Paysource's owner, Robert Sacco, upon his return to the United States from Costa Rica.   Greico's account is excerpted below:

The former owner and chairman of PaySource Inc. who was indicted on 67 federal counts was released on $50,000 bond Tuesday, one day after his arrest on 67 federal felony counts.   He was charged with defrauding the Internal Revenue Service of $26.7 million by filing false reports.   Robert R. Sacco, 59, formerly lived in Huber Heights and now lives in Orlando, Fla. IRS and customs agents arrested him Monday at Orlando International Airport as he returned from a vacation in Costa Rica.

'The amount is enough to be staggering,' said Cincinnati attorney Howard L. Richshafer, a former IRS agent. A federal grand jury indicted Sacco on Oct. 26, but the indictment remained under seal until late last week. According to the indictment, Sacco defrauded the government by withholding money to pay federal employment taxes from employees’ paychecks, then keeping the money.

The company’s CEO, Charles C. Painter, pleaded guilty in February to one count of aiding the preparation of a false federal employment tax return. He is to be sentenced Dec. 16 and faces a maximum of three years in prison. Federal authorities said he avoided paying $7 million in taxes during the second half of 2007. Painter is identified as an 'unindicted co-conspirator' in Sacco’s indictment as is 'T.G., a person whose identity is known to the Grand Jury,' and who 'previously served as PaySource’s Chief Financial Officer.'

Directing his co-conspirators to file false IRS documents, Sacco was able to avoid paying federal employment taxes owed by PaySource between October 2007 and April 2009, the indictment states.
Howard L. Richshafer, an attorney and former IRS agent, said that the IRS often files civil proceedings — not criminal — with the goal of getting the money paid. But with allegations of false documents and a huge amount of money, it probably made the government go a different way, he said. Richshafer said it has been his experience that companies themselves, rather than payroll service operators like PaySource Inc., fall behind in forwarding employee withholding funds to the IRS. But, if the company gives the payroll service operator control over the payroll accounts, there could be a temptation to keep money that legally should be sent to the IRS, he said.

'As the economy has gotten poorer, since 2008, I’ve seen more and more companies having this sort of problem,' he said."

It’s potentially a double-whammy problem for the government, because employees will use their W-2 forms to get refunds on amounts that were never paid in the first place, he said."
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When you are a paycheck employee of a company that utilizes a payroll service, you assume everything is on the up and up.  This is the second of two stories like this I've come across in the last couple of weeks.  The second story out of Sacramento was far too complicated and involved too many plot points to talk about. 

But this should tell you something about how difficult it is trying to run an office.  People utilize companies like this because it is too complicated and too involved for the ordinary lawyer, or other professional.  You think you are buying peace of mind, now you can think again.  The question is, for those companies and for those offices who used this service--are they off the hook?  Are the employees who obtained refunds based on fraudulent W-2s off the hook?  There are a lot of ripples left in the wake of this sinking criminal enterprise.

8 comments:

  1. Bob Sacco is a criminal who should spend ALOT of time behind bars. Just prior to starting PaySource he was convicted of embezzeling $61,000 from a company in NY. If he gets a slap on the wrist he will do it again.

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  2. FINALLY! They have arrested and charged this man. This was a long time coming. Its extra special that he was returning from a vacation. (spending some of those millions he STOLE) He is charged with defrauding the IRS; but we can't forget the fact that he stole money from hard working, trusting, tax paying (they thought) companies and people. I hope they are taking ALL of his and his family's possesions they have aquired in the years while he was stealing. Like the previous post said he WILL do this again. He was caught in NY and went on to do it to a much grander scale. He and his family need to pay the consequences. I hope to see justice done.

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  3. I just one to say that this was not a mystery to many people. Most people knew that he and his wife were not upstanding citizens. Thank goodness they were caught( his wife was on the board of directors). She should be equally accused. BE nice to those on the way up the ladder you may need them on your way back down...They should have been. Shame on them!

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  4. That money most likely paid for the expensive performance vehicle his son was playing in when he ran a red light and killed a wonderful woman on April 14, 2009. http://www.daytondailynews.com/news/dayton-news/man-arrested-in-fatal-crash-has-florida-speeding-record-84176.html

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  5. That money paid for everything he and his family bought during those years. Including his son's car (that was turned into a weapon) and his daughter (16 at the time of purchase) Mercedes sport car. His wife's various cars..including a Bentley. The house in Huber and the house in Orlando.... the list goes on and on. No matter what he bought (with STOLEN money) he and his wife (Nichole) couldn't buy brains or class. I hope the IRS takes everything they bought from the money he (and his wife) stole.

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  6. He isn't the only one that ran or runs a PEO that has done this. It's time to put a stop to PEOs they are based on a lie and need to be banned.

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  7. This man is real close to ruining our business at the present time 2013..not only did he steal our payroll wage with holdings from our employees he also didn't take out a work comp policy for our employees he was responsible to do..so guess now who is in multiple lawsuits the state has against us for what they say were an uninsured business in our state and now we are are close to losing and will most likely go out of business all because this looser Sacco is nothing but a DAMN FRAUD in everyway!What a scum bag that deserves everything he gets..GO TO HELL SACCO

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