A former Sussex County air conditioning and heating contractor received two months in prison for not paying taxes withheld from employee paychecks.
Keith D. Clarke, 53, of Delmar, Maryland, was sentenced to the short prison term and full restitution. The defendant pleaded guilty to failure to account for and pay over employment taxes, in December 2015.
According to court filings and statements during the plea hearing, Clarke operated a plumbing and air conditioning business in Laurel known as Clarke Service Group, LLC, from at least 2000 through early 2012.
From the fourth quarter of 2009, through the fourth quarter of 2011, Clarke withheld at least $131,424.09 in payroll taxes from his employees’ paychecks, but he did not pay those funds over to the Internal Revenue Service.
Also, Clarke failed to pay to the IRS the own company portion of the Payroll Taxes, of at least $81,192.44, from the fourth quarter of 2009, through the fourth quarter of 2011, prosecutors stated.
At the same time, the defendant withheld retirement plan contributions from his employee’s paychecks, and he failed to remit at least $23,670.00 of these contributions to the retirement plan provider. Moreover, Clarke failed to remit the company’s agreed portion of the contributions to the provider, in the amount of $926.70, the documents stated.
Meanwhile, the defendant used company funds to support his personal lifestyle. For example, the defendant spent nearly $160,000 in company funds to pay for golf excursions, vacations, retail purchases, groceries, dining, and other expenditures of a personal nature, prosecutors alleged. Clarke failed to file his own personal federal income tax returns for the years 2009, 2010, and 2011.
U.S. Attorney for Delaware Charles Oberly stated, “Although the Government sought a sentence of 16 months incarceration, the imposition of a prison term of two months, coupled with restitution and the impact of a felony conviction, will hopefully serve as a deterrent to others who ignore their obligations to account properly for payroll taxes and retirement plan contributions, so as to support a more lavish lifestyle. My office is committed to prosecuting those who want to cheat the IRS and those who fail to fulfil their tax obligations.”
“Business owners were looking to enrich themselves at the expense of their employees by not remitting payroll taxes will be held accountable. The programs funded by employment taxes are essential to the American workforce and the Internal Revenue Service, Criminal Investigation has placed a high priority on employment tax compliance,” said Special Agent in Charge, Akeia Conner.
The case is the result of an investigation by the Internal Revenue Service, Criminal Investigation, and the U.S. Department of Labor, Office of Inspector General. This case was prosecuted by Assistant United States Attorney Lauren Paxton.
