Georgia Businessman Sentenced for Participating in Kickback Scheme and for Filing False Tax Returns
U.S. Attorney Kenneth A. Polite announced that KENNETH JOHNSON, SR., age 52, of Stone Mountain, Georgia, was sentenced today after previously pleading nolo contendere (no contest) to conspiring to pay kickbacks in a federal debris removal contract and two counts of filing false tax returns with the Internal Revenue Service.
U.S. District Judge Stanwood R. Duval sentenced JOHNSON to three years’ probation that included one year of home incarceration. In addition to the term of imprisonment, JOHNSON was also ordered to pay $113,771 in restitution to the Internal Revenue Service.
“We are pleased with the sentence handed down against Mr. Johnson today,” said Jerome R. McDuffie, Special Agent in Charge, IRS Criminal Investigation. “Quite often crimes of greed include more than concealing income from the IRS. This investigation is a prime example of how Special Agents of IRS Criminal Investigation work with the FBI, the Department of Defense, and the United States Attorney’s Office to bring individuals involved in fraud to justice. Mr. Johnson sought to exploit the tragedy of Hurricane Katrina for personal gain. We will continue to work tirelessly with our law enforcement partners to stop those individuals who scheme and conspire with each other to benefit themselves to the detriment of other citizens and their government. “
According to court documents, the U.S. Army Corps of Engineers hired Phillips and Jordan, a national construction firm, to manage the removal of storm debris from the City of New Orleans after Hurricane Katrina devastated the metro area. After they were awarded the contract, Phillips and Jordan hired Company A, a local solid waste management company to assist with the debris removal project. Shortly after securing the contract, Company A hired ANTHONY PENN, a local businessman, to manage the debris removal project for them. After some time on the job, PENN approached the owners of Company A and asked if they would consider hiring his brother-in-law, KENNETH JOHNSON, as a sub-tier subcontractor to work on the project. The owners of Company A accepted the recommendation and hired JOHNSON’s company, KCJ Enterprises, as a sub-tier subcontractor. Sometime thereafter, PENN asked JOHNSON to provide him with a cut of the revenue that KCJ Enterprises was receiving from Company A as a reward for steering the contract to him. JOHNSON agreed to the scheme and wired a total of $236,461.55 in kickback payments to PENN from July 12, 2006 to February 8, 2008.
As part of the investigation, it was determined that JOHNSON filed false tax returns with the IRS for tax years 2007 and 2008 in an effort to conceal the kickback scheme and to avoid paying taxes on his income from the debris removal work. As a result, JOHNSON avoided paying $113,771.00 in federal taxes.
U.S. Attorney Polite praised the work of the Federal Bureau of Investigations, the United States Department of Defense, and the Internal Revenue Service in investigating this matter. The case was prosecuted by Assistant U.S. Attorneys Spiro G. Latsis and Theodore R. Carter, III.