Operator of Third-Party Payroll Company Sentenced to More Than 11 Years in Prison for Embezzling $17 Million from Client Companies
CHARLOTTE, NC—James William Staz was sentenced today to 135 months in prison for embezzling more than $17 million from clients of the third-party payroll company he operated, announced Jill Westmoreland Rose, U.S. Attorney for the Western District of North Carolina. Chief U.S. District Judge Frank D. Whitney also sentenced Staz to two years of supervised release and ordered him to pay over $17 million as restitution. Staz pleaded guilty in March 2015 to wire fraud, transactional money laundering and tax evasion.
U.S. Attorney Rose is joined in making today’s announcement by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division and Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI).
According to court documents and today’s sentencing hearing, Staz operated a third-party payroll company, “Employee Services.Net, Inc.” (ESN), that provided various services to client companies, including processing payroll, collecting and paying employment taxes, and preparing and filing employment tax forms. Court records show that Staz was ESN’s vice president and later the company’s president, and at its height, ESN had approximately 500 client companies nationwide. According to court documents, ESN had access to the clients companies’ bank accounts and could draft directly the funds needed to cover expenses associated with the services it provided.
Court records indicate that from 2008 to March 2014, Staz defrauded at least 113 ESN clients of approximately $17 million dollars intended for payroll and employment tax payments and used it to support his personal lifestyle. Staz stole at least $3.7 million in client funds and used the money to pay for alcohol, strip club entertainment to include leaving a $5,000 tip, jewelry, a Mercedes Benz and a luxury home. To conceal his embezzlement, court records show that Staz made false entries into ESN’s accounting system to make it appear as though the funds were used for legitimate client expenses.
At today’s sentencing hearing, Judge Whitney said that Staz “victimized a lot of people, across the socio-economic spectrum and across the country,” including “non-profits that operate on a very tight budget.” Judge Whitney also said that the defendant “probably victimized more individuals and legal entities than any other fraud scheme this court has ever seen,” adding, “that kind of reckless disregard for spending people’s money is horrifying.”
James Staz has been in custody since his arrest in October 2014. He will be transferred to the custody of the Federal Bureau of Prisons upon designation of a federal facility. All federal sentences are served without the possibility of parole.
At today’s sentencing hearing Judge Whitney granted the government’s motion to dismiss the charges against James Staz’s father and former codefendant, William James Staz, who is now deceased.
The investigation for the case was handled by the FBI and IRS-CI. Assistant U.S. Attorney Kelli H. Ferry of the U.S. Attorney’s Office, in Charlotte, prosecuted the case.