Larry Lough of Ohio was sent to jail for two years for defrauding investors and failing to pay employment taxes. (Incidentally, I grew up about 60 miles from Larry.)
Mr. Lough was the operator of a company called Tri E Technologies (TET). He committed the most typical class of payroll tax schemes. Having control over both the 941 forms and the federal employment tax funds, he was easily able to withhold funds from the employees and keep their shares as well as the matching share for the subway. Lough underreported wages by more than $750,000. He created false accounting records and a false partnership return.
Mr. Lough was ordered to pay almost $758,000 to those defrauded investors as well as an additional $145,000 to the IRS. Not only was Lough guilty of failing to pay the payroll taxes, but he was also arrested for an ongoing conspiracy to commit mail and wire fraud, conspiracy to commit employment tax fraud, and finally, tax evasion.
All in all, Lough got off really easy with just two years in prison and three years probation. Don’t ever wait if you know about a tax qui tam or tax whistleblower matter. The law is clear: the first to file the case with the IRS wins the relator’s share!