A federal judge in Worcester, Mass., has sentenced William Scott Dion of Sanbornville, N.H., to 84 months in prison for conspiring to defraud the United States and for obstructing the IRS.
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In April, a federal jury convicted Dion and Catherine Floyd, also of Sanbornville, and Charles Adams of Norwood, Mass., for conspiracies to defraud the U.S. through the promotion and use of multiple tax fraud schemes, including an “under the table” payroll scheme and, in the case of Dion and Floyd, an additional “underground warehouse banking” scheme designed to conceal customer income and assets from the IRS. Floyd and Dion were also convicted separately for corruptly endeavoring to obstruct the IRS’s ability to determine their own income. Adams was separately convicted of tax evasion.
According to evidence presented at trial, Dion, Floyd and Adams ran a payroll tax scheme in order to pay employees “under the table” without properly accounting for, withholding, and paying payroll taxes. The three promoted the payroll scheme to employers and individuals who wanted to avoid payment of employer payroll taxes and individual payroll taxes, running the scheme under the names Contract America, Talent Management and New Way Enterprises.
Approximately 150 individuals subscribed to the scheme and more than $2.5 million in unreported wages and compensation were paid through the system.
Evidence also established that Dion and Floyd’s “underground warehouse banking” scheme helped subscribers conceal income and assets from the IRS, operating under the names Your Virtual Office, Office Services and Calico Management. As part of this scheme, the defendants maintained accounts at several banks and used the accounts to deposit and commingle business receipts and other funds received from subscribers in order to mask the true ownership of the funds. More than $28 million in deposits were made into the various bank accounts used in the scheme.
In August 2009, the three defendants were indicted with four other individuals relating to these schemes. The four have since pled guilty and are awaiting sentencing.
Dion has also been also ordered to pay $3 million in restitution.