|
Our investigation, with strategies designed specifically for accounting firms for the purpose of client acceptance or client continuation evaluation, quickly revealed that the subject company and four of its subsidiaries are under federal indictment for conspiracy and wire fraud as part of a multimillion dollar tax fraud scheme orchestrated by the companies' founder. This individual recently was sentenced to over 20 years in prison and ordered to pay restitution of $180 million to the Internal Revenue Service, after pleading guilty to five felonies including failure to collect and pay payroll taxes and obstructing a federal investigation. It is reportedly one of the largest employment tax fraud cases in IRS history. Before the sentencing, the individual attempted to justify his actions by claiming insanity. The subject company and its subsidiaries also were defendants in dozens of lawsuits for fraud and breach of contract with damage claims totaling over $220 million, in addition to filing for Chapter 11 bankruptcy. Several motions had been filed to dismiss the bankruptcy proceedings, one of which was made by the company's former accountants who were sued for professional negligence. In court papers, the accountants asked that the case be dismissed or converted to a Chapter 7 because "the only reason the debtor filed the petition was in an effort to help (the founder's) criminal case." The motion to dismiss also argued that the company has no chance to successfully reorganize because it is a "sham company used only for illegal activities," has no remaining employees and no income. Other cases: Consider the source…of the funds | One of the largest employment tax fraud cases in history For more on diploma mills: Diploma mill articles on Scherzer Blog | Green energy scams put portfolios into the red |
