[US] 18-month federal prison sentence for CEO’s failure to pay all payroll taxes

The CEO of a company based in Del Mar, California, that sold software to car dealerships was last week sentenced to 18 months in federal prison for failing to provide the IRS nearly $5 million in payroll taxes, Del Mar Times reports.

Michael Lucas - who ran TradeMotion Inc. - pleaded guilty in April to a charge of failing to pay federal employment taxes. In addition to ordering Mr Lucas to spend time in custody, on February 11 US District Judge Anthony Battalia also sentenced the defendant to three years of supervised release and ordered him to repay the amount he had failed to pay the IRS.

According to federal prosecutors, Mr Lucas collected more than $2.1 million in withholdings from TradeMotion employees between late 2011 and mid-2015 yet paid only $760,017 of the money to the IRS.

The government also reportedly accused Mr Lucas of withholding more than $3.5 million in payroll taxes from paycheques of the employees of other companies he ran and failing to pay that money to the IRS as well.

Prosecutors had asked that Mr Lucas receive a sentence of two years in custody. In a sentencing memorandum, they wrote that prison sentences in tax cases can act as a general deterrent to others.

In a brief filed with the court prior to his sentencing, Mr Lucas’ attorneys Charles La Bella and Andrew Young requested house arrest, saying their client was “deeply remorseful and prepared to accept whatever punishment the Court deems appropriate.”

They wrote that Mr Lucas had been engaged in good-faith talks with the IRS several years before the criminal investigation started and that he had paid “a significant portion” of the tax obligation. They also noted that Mr Lucas’ failure to pay the taxes “was motivated entirely by his desire to keep the company operational.”

The brief said that the company had been successful until the collapse of the auto industry in 2008, after which Mr Lucas’ company spent the next decade “under the constant threat of bankruptcy.” The defence attorneys said Mr Lucas wrongly saw the IRS “as just another creditor” and fell further behind on the tax obligation.

They also said that Mr Lucas at no point hid the real amount he owed the IRS.

Source: Del Mar Times

(Quotes via original reporting)

The CEO of a company based in Del Mar, California, that sold software to car dealerships was last week sentenced to 18 months in federal prison for failing to provide the IRS nearly $5 million in payroll taxes, Del Mar Times reports.

Michael Lucas - who ran TradeMotion Inc. - pleaded guilty in April to a charge of failing to pay federal employment taxes. In addition to ordering Mr Lucas to spend time in custody, on February 11 US District Judge Anthony Battalia also sentenced the defendant to three years of supervised release and ordered him to repay the amount he had failed to pay the IRS.

According to federal prosecutors, Mr Lucas collected more than $2.1 million in withholdings from TradeMotion employees between late 2011 and mid-2015 yet paid only $760,017 of the money to the IRS.

The government also reportedly accused Mr Lucas of withholding more than $3.5 million in payroll taxes from paycheques of the employees of other companies he ran and failing to pay that money to the IRS as well.

Prosecutors had asked that Mr Lucas receive a sentence of two years in custody. In a sentencing memorandum, they wrote that prison sentences in tax cases can act as a general deterrent to others.

In a brief filed with the court prior to his sentencing, Mr Lucas’ attorneys Charles La Bella and Andrew Young requested house arrest, saying their client was “deeply remorseful and prepared to accept whatever punishment the Court deems appropriate.”

They wrote that Mr Lucas had been engaged in good-faith talks with the IRS several years before the criminal investigation started and that he had paid “a significant portion” of the tax obligation. They also noted that Mr Lucas’ failure to pay the taxes “was motivated entirely by his desire to keep the company operational.”

The brief said that the company had been successful until the collapse of the auto industry in 2008, after which Mr Lucas’ company spent the next decade “under the constant threat of bankruptcy.” The defence attorneys said Mr Lucas wrongly saw the IRS “as just another creditor” and fell further behind on the tax obligation.

They also said that Mr Lucas at no point hid the real amount he owed the IRS.

Source: Del Mar Times

(Quotes via original reporting)