SIX INDIVIDUALS CAUGHT UP IN CORPORATE BONUS SCHEME

The following excerpt is from the Department of Justice website:
Thursday, March 29, 2012
Six Arraigned on Tax Conspiracy in a Corporate Bonus Scheme Based in Western New York
Six officials of an Upstate New York firm were arraigned yesterday before Magistrate Judge Leslie G. Foschio.   On March 21, a federal grand jury in the Western District of New York indicted the six defendants, Philip R. DeLuca, Alfred R. LaGreca, Frank A. Fracassi, Michael A. Elia, Laurence A Elia and Richard A. Elia, on tax charges, including conspiring to defraud the Internal Revenue Service (IRS).

According to the superseding indictment, between the late 1990s and at least April 2007, the defendants were officers of Sevenson Environmental Services Inc., a Subchapter S corporation (a corporation treated like a partnership for tax purposes) located in Niagara Falls, N.Y., that was involved in remediation of sites contaminated with hazardous waste.  During that time, the defendants allegedly conspired to defraud the IRS by developing and managing a scheme whereby they and other Sevenson employees received bonus compensation that was not reported to the IRS.

The superseding indictment also alleges that this compensation permitted certain Sevenson employees to obtain goods and services that were paid for by the corporation, but not reported to the IRS.  In order to facilitate Sevenson’s payment for these goods and services, it is alleged that the defendants caused documents to be fabricated, invoices to be falsified and false individual income tax returns to be filed.   From the late 1990s through at least April 2007, Sevenson awarded at least 23 employees a total of approximately $1 million in unreported, non-cash bonuses.

If convicted, each defendant faces a potential maximum of five years in prison and a maximum fine of $250,000 on the conspiracy charge.

An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt.

This case was investigated by the IRS-Criminal Investigation and is being prosecuted by Tax Division Trial Attorneys Shawn Noud, Robert Kennedy, and Erin Pulice.