WASHINGTON – Steven Christensen and Diane C. Christensen of Sandy, Utah, were each sentenced Tuesday to prison for conspiring to defraud the United States by attempting to impede the Internal Revenue Service’s collection of federal income and employment taxes, the Justice Department and the Internal Revenue Service (IRS) announced. Diane Christensen was sentenced to 41 months imprisonment and 36 months of supervised release. Steve Christensen received a sentence of 37 months imprisonment and also 36 months of supervised release.
The husband and wife were sentenced by Salt Lake City federal judge, David Sam. Diane Christensen’s conduct cost the federal Treasury between $2.5 million and $5 million, and Steven Christensen’s conduct between $1.5 million and $2.5 million in lost tax revenue.
“Employers are required by law to withhold taxes from their employees’ paychecks, and to pay those taxes into the federal Treasury,” said Eileen J. O’Connor, Assistant Attorney General for the Justice Department’s Tax Division. “People who steal those funds instead of paying them into the federal Treasury can expect to be prosecuted, convicted and sentenced to prison.”
On Nov. 9, 2005, the Christensens pleaded guilty to a conspiracy charge that spanned the years 1995 through 1998. The Christensens were principals at various employee leasing and payroll businesses, including Wasatch Management Services, Paragon Business Solutions of America and Professional Staffing Advantages. The Christensens admitted that they knowingly diverted money that Wasatch Management Services had collected for the payment of employment taxes and used some of that money for personal expenditures. Because of the Christensens’ conduct, Wasatch Management Services failed to pay its employment taxes to the IRS in 1995 and 1996.
Diane Christensen also admitted that she filed multiple fraudulent employment tax returns. In addition, both defendants admitted that for tax years 1995, 1996 and 1997, they directed Wasatch Management Services, Paragon Business Solutions of America and Professional Staffing Advantages not to file corporate income tax returns and that they failed to file personal income tax returns.
“Employment tax crimes are a growing concern for the IRS,” stated Nancy Jardini, IRS Chief, Criminal Investigation. “Unpaid employment taxes represent a large portion of the nation’s tax gap – or unpaid taxes – and harm not only the government but also those employees who find neither their taxes nor their retirement contributions have been made by their employer’s payroll company.”
Documents filed with the court also indicate that between 1996 and 1998, the couple diverted money from various Paragon bank accounts, which were held at First Utah Bank. These funds were not the property of the Christensens or Paragon, but were the property of others, including First Utah Bank. The Christensens used some of the diverted money for personal expenditures. Filings in an unrelated state court matter indicate that the Christensens used the money that was the rightful property of First Utah Bank to build a large home and to purchase luxury vehicles, stocks and jewelry.
"Those who operate payroll servicing companies, and the defendants in this case did, place themselves in a position of trust with their clients and with the United States,” said Brett Tolman, U.S. Attorney for the District of Utah. “Breaking that trust by stealing payroll taxes is a serious crime."
Information about the Justice Department’s Tax Division can be found at http://www.usdoj.gov/index.html