Payroll Services Company Owner Pleads Guilty to Diverting $1.2 Million in Employment Taxes Due the IRS
PROVIDENCE, RI—Warren Hebert, 67, of Barrington, R.I., owner of Checkmaster Payroll Services, pleaded guilty in U.S. District Court in Providence today to defrauding seven businesses and the Seekonk, Mass., Water District of more than $1.2 million dollars in federal payroll taxes that were to have been paid to the IRS, announced United States Attorney Peter F. Neronha and William P. Offord, Special Agent in Charge of IRS Criminal Investigation.
Hebert admitted to the court that he failed to pay to the IRS approximately $1,266,680 in funds he withdrew from client accounts to pay the clients’ federal employment taxes. Hebert admitted that he diverted the funds for his own use, in some instances paying the additional tax liabilities, interest and penalties of other clients whose tax returns he had previously failed to accurately prepare, file and pay-over.
Hebert admitted to the court, beginning as early as April 2009 and continuing through at least October 2011, he diverted money from at least seven businesses operating in Rhode Island and Massachusetts, including, among others, a moving and storage company, nursery school, jewelry packaging company, and marketing and communications company. Hebert also admitted to diverting funds from the Seekonk, Mass., Water District, a municipal water agency.
Appearing before U.S. District Court Chief Judge William E. Smith, Hebert pleaded guilty to eight counts of wire fraud and one count of impeding the administration of the Internal Revenue Code. He is scheduled to be sentenced on January 9, 2015.
Wire fraud is punishable by a statutory penalty of up to 20 years in federal prison and a fine of up to $250,000. Impeding the administration of the Internal Revenue Code is punishable by a statutory penalty of up to three years in federal prison and a fine of up to $250,000.
The case is being prosecuted by Assistant U.S. Attorney John P. McAdams.
The matter was investigated by IRS Criminal Investigation, with the assistance of the FBI, Rhode Island FDA Task Force, Rhode Island State Police and Barrington Police.