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60 Minutes and a Guilty Verdict for $34 Million Tax Fraud! Stephen Michael Ewing Facing Prison
Southlake, TX
Tuesday, March 11, 2008
Chuck Gallagher White Collar Crime Speaker
As a white collar crime speaker (I address groups on white collar crime, fraud and how to avoid it), I have followed closely the trial of Stephen Michael Ewing, Gary Trebert and Larry May - all charged with massive tax fraud - $34 million to be exact.
According to the US Attorney's office, the government presented evidence that beginning in August 1999 and continuing through mid-May 2004, Ewing, along with co-defendants, Gary Trebert and Larry May, conspired together, and with others, to defraud the U.S. by impeding, impairing, obstructing, and defeating the lawful government functions of the Internal Revenue Service (IRS) in the ascertainment, computation, assessment, and collection of the revenue, that is, nursing facility employees' withheld income taxes, social security taxes and medicare taxes, and the Department of Health and Human Services (HHS) in the administration of the Social Security Act and the Medicare and Medicaid programs.
Both Trebert and May plead guilty and Trebert agreed to cooperate with the federal government in the prosecution of Ewing in return for a 2 year reduction in his 10 year sentence. May is scheduled to be sentenced on April 28, 2008; Trebert is scheduled to be sentenced on July 14, 2008.
Unlike the others, Stephen Michael Ewing elected to plead not guilty and take the issue to trial. He was found Guilty!
Again, according to the US Attorney, both Trebert and May testified against Ewing at trial. Trebert testified that he and Ewing repeatedly discussed the creation and the overseas payroll companies to interfere with IRS efforts to collect the payroll taxes. Trebert also testified that Ewing once boasted about having previously operated nursing homes without having to pay the payroll taxes. Larry May testified that Trebert and Ewing made him president of the company, even though he told them he was not qualified.
May further testified that, during some of the periods covered by the Indictment, he was making $10,000 to $25,000 per month for doing little more than signing documents, including tax returns, and taking tax returns to England to mail back to the IRS in the U.S. More than 150 sham staffing/payroll entities, many with foreign business addresses at drop boxes in England and Austria, were created to file Form 941 employer withholding tax returns with the IRS, preventing the IRS from assessing and attempting to collect more than $34 million of unpaid payroll tax liabilities from Trebert, Ewing and May, and creating the appearance that these sham staffing/payroll entities employed more than 4500 nursing facility employees, when they did not.
Were they the smartest guys in the room? Often I have been asked that question and the answer is - Yes! At the time of the crime, more times than not, the white collar criminal does think that he or she has outsmarted the system. It appears obvious that all three felt that the offshore shame companies would be so hard to trace that somehow they would get by. The deception of ego is often the beginning of the end. The deception can be so mentally profound that ones fails to recognize truth. Just like the law of gravity, there is a fundamental truth that evades the "smarter than the system" criminal. That truth is - every choice has a consequence!
More times than not there are tell tail signs that a fraud is unraveling. While I was not personally close to this case, I have studied the science of fraud and crime enough to know that external markers often precede the downfall of the criminal. In the case of these defendants, they diverted to themselves and their personal activities substantial sums of money derived from their nursing home operations and from the non-payment of employees' withheld payroll taxes. At trial, the government presented evidence that, during the period covered by the Indictment, Ewing spent more than $2.5 million in money derived from the nursing home operations on his personal expenses. The total expenditures included more than $200,000 at department stores such as Saks Fifth Avenue, and more than $250,000 on automobiles.
You reap what you sow. In this case, justice was done - eventually.
In his Poignant, High-Energy, Thought-Provoking and Honest Motivational Presentations Chuck Shows Organizations how to:
* Transform self-limiting beliefs into personal and organizational success
* Help employees increase ethics awareness and reduce fraud
* Understand the effect of choices on their personal and professional lives
According to the US Attorney's office, the government presented evidence that beginning in August 1999 and continuing through mid-May 2004, Ewing, along with co-defendants, Gary Trebert and Larry May, conspired together, and with others, to defraud the U.S. by impeding, impairing, obstructing, and defeating the lawful government functions of the Internal Revenue Service (IRS) in the ascertainment, computation, assessment, and collection of the revenue, that is, nursing facility employees' withheld income taxes, social security taxes and medicare taxes, and the Department of Health and Human Services (HHS) in the administration of the Social Security Act and the Medicare and Medicaid programs.
Both Trebert and May plead guilty and Trebert agreed to cooperate with the federal government in the prosecution of Ewing in return for a 2 year reduction in his 10 year sentence. May is scheduled to be sentenced on April 28, 2008; Trebert is scheduled to be sentenced on July 14, 2008.
Unlike the others, Stephen Michael Ewing elected to plead not guilty and take the issue to trial. He was found Guilty!
Again, according to the US Attorney, both Trebert and May testified against Ewing at trial. Trebert testified that he and Ewing repeatedly discussed the creation and the overseas payroll companies to interfere with IRS efforts to collect the payroll taxes. Trebert also testified that Ewing once boasted about having previously operated nursing homes without having to pay the payroll taxes. Larry May testified that Trebert and Ewing made him president of the company, even though he told them he was not qualified.
May further testified that, during some of the periods covered by the Indictment, he was making $10,000 to $25,000 per month for doing little more than signing documents, including tax returns, and taking tax returns to England to mail back to the IRS in the U.S. More than 150 sham staffing/payroll entities, many with foreign business addresses at drop boxes in England and Austria, were created to file Form 941 employer withholding tax returns with the IRS, preventing the IRS from assessing and attempting to collect more than $34 million of unpaid payroll tax liabilities from Trebert, Ewing and May, and creating the appearance that these sham staffing/payroll entities employed more than 4500 nursing facility employees, when they did not.
Were they the smartest guys in the room? Often I have been asked that question and the answer is - Yes! At the time of the crime, more times than not, the white collar criminal does think that he or she has outsmarted the system. It appears obvious that all three felt that the offshore shame companies would be so hard to trace that somehow they would get by. The deception of ego is often the beginning of the end. The deception can be so mentally profound that ones fails to recognize truth. Just like the law of gravity, there is a fundamental truth that evades the "smarter than the system" criminal. That truth is - every choice has a consequence!
More times than not there are tell tail signs that a fraud is unraveling. While I was not personally close to this case, I have studied the science of fraud and crime enough to know that external markers often precede the downfall of the criminal. In the case of these defendants, they diverted to themselves and their personal activities substantial sums of money derived from their nursing home operations and from the non-payment of employees' withheld payroll taxes. At trial, the government presented evidence that, during the period covered by the Indictment, Ewing spent more than $2.5 million in money derived from the nursing home operations on his personal expenses. The total expenditures included more than $200,000 at department stores such as Saks Fifth Avenue, and more than $250,000 on automobiles.
You reap what you sow. In this case, justice was done - eventually.
In his Poignant, High-Energy, Thought-Provoking and Honest Motivational Presentations Chuck Shows Organizations how to:
* Transform self-limiting beliefs into personal and organizational success
* Help employees increase ethics awareness and reduce fraud
* Understand the effect of choices on their personal and professional lives
Chuck Gallagher
Chuck Gallagher, LLC
Southlake, TX
828-244-1400
360.283.1400
