Comptroller of New York Payroll Services Company Sentenced for $20 Million Fraud Involving Sacramento County
| U.S. Attorney’s Office April 12, 2013 |
SACRAMENTO, CA—United States Attorney Benjamin B. Wagner announced today that Kerry Seaman, 37, of Lake Ronkonkoma, New York, was sentenced today by Senior United States District Judge Garland E. Burrell, Jr. to three years and eight months in prison in connection with her role in a scheme to divert more than $20 million from Sacramento County as well as two other businesses, SanDisk Corporation and The Stanley Works and Stanley Solutions Inc. As part of the sentence, she was ordered to pay $19,141,618 in restitution. Seaman pleaded guilty to wire fraud on November 19, 2010.
Kerry Seaman was the comptroller for Ingentra HR Services Inc. (Ingentra), a payroll services corporation in Hauppauge, New York. Co-defendant Albert Cipoletti 64, of Northport, New York, was the chief executive officer. Cipoletti pleaded guilty to one count of wire fraud on October 29, 2010, and was sentenced on May 11, 2011, to five-and-a-half years in prison and ordered to pay $19,141,618 in restitution. Seaman cooperated with federal authorities in the course of the investigation.
This case was the product of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation. The county of Sacramento reported the offense to federal law enforcement and has assisted with the investigation. Assistant United States Attorney S. Robert Tice-Raskin prosecuted the case.
U.S. Attorney Wagner stated, “Over a long period of time, Seaman was a key player in a scheme that caused millions of dollars in losses to the IRS, Sacramento County, and other clients. She was entrusted with public funds and had a responsibility to preserve and protect those funds. As this prison sentence makes clear, persons who cheat the public will be held accountable.”
“Payroll companies who are hired to handle various financial affairs for employers, but who intentionally fail to remit withheld employment taxes are not only enriching themselves, they are creating financial problems for the employees,” stated IRS-Criminal Investigation Special Agent in Charge José M. Martínez. “The defendant in this case wrongfully diverted over $20 million in tax withholding, which should have been remitted to the IRS on behalf of the clients’ employees. Today’s sentence should be a warning that IRS-Criminal Investigation will always be there to pursue those individuals who play fast and loose with other people’s money for their own personal gain.”
According to court documents, Ingentra, then known as Humanic Solutions Inc., was hired by Sacramento County in late 2004 to process the payrolls for Sacramento County’s Special Districts (including the Sacramento Metropolitan Fire District, the cemetery district, the parks and recreation district, independent contractors, and various elected officials). As part of the payroll services, Ingentra calculated the tax payments for the clients and the clients’ employees and then transmitted the payments to the state and federal tax authorities. Ingentra was responsible for paying the IRS the income tax withholdings to the IRS and to file the Employer’s Quarterly Federal Tax Form (Form 941) with the IRS on behalf of the clients. (Form 941 includes totals for number of employees, total pay for the period being reported, and amounts withheld from the pay of the employees.)
As stated in Seaman’s plea agreement, from 2005 until April 2010, she and Cipoletti devised a scheme to defraud the county of Sacramento-Special Districts, SanDisk, and Stanley of the tax withholdings intended to be paid to the IRS by collecting the correct amount from the clients but underreporting to the IRS the amount owed and diverting the difference to Ingentra’s operating account for Ingentra’s own use.
According to court documents, Cipoletti and Seaman sent funding letters to the clients that correctly calculated payroll and federal tax withholdings for the clients’ employees, and the clients wire transferred funds to Ingentra to pay both the payroll and taxes. Cipoletti and Seaman then filed false 941s to the IRS, understating the true employee tax withholdings for these clients. Cipoletti and Seaman wrongfully diverted in excess of $20 million in tax withholdings from clients Stanley, SanDisk, and Sacramento County that should have been remitted to the IRS on behalf of these clients and these clients’ employees.