Northern Virginia Businessman Pleads Guilty to Bank and Tax Fraud

WASHINGTON - Kevin Shaffer of Sarasota, Fla., and Washington D.C., pleaded guilty to bank fraud and tax evasion before Alexandria, Va., federal district court Judge Gerald Bruce Lee, the Justice Department and the Internal Revenue Service (IRS) announced today. Judge Lee set sentencing for Feb. 4, 2011.

According to documents filed with the court, Shaffer was the president and a co-owner of a Manassas, Va.,-based consulting business named Matrix-DSS. Shaffer admitted to committing bank fraud against BB&T Corp. In connection with a $5,650,000 construction loan for a home in McLean, Va., Shaffer signed a false loan application. Shaffer submitted to BB&T fictitious documents, including Forms W-2, pay stubs, bank statements and retirement account statements. BB&T sustained a loss of $1,815,612 as a result of this fraud. The total bank fraud loss, which includes additional frauds that Shaffer committed against other banks, is $2,688,571.93.

Shaffer also pleaded guilty to tax evasion for the 2005 tax year. According to court documents, Shaffer did not file a timely tax return for that year and did not pay the taxes he owed. During an interview with IRS agents in December 2008, however, he falsely claimed that he had electronically filed a tax return for that year and had paid his taxes by credit card. Shaffer eventually filed a 2005 tax return in January 2009, but under-reported his income. The government sustained a $211,865.86 tax loss as a result. Including relevant conduct pertaining to Shaffer’s tax evasion for tax years 2004, 2006 and 2007, the total tax loss is $536,228.77.

Finally, Shaffer admitted failing to account for and pay over to the IRS $42,320.66 in federal taxes that he withheld from the paychecks of Matrix DSS employees during the quarter that ended Dec. 31, 2007. Including relevant conduct for other quarters, the total tax loss associated with this conduct is $272,209.14.

Shaffer faces up to 40 years in prison.

Acting Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division and Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia, commended the IRS and Secret Service agents who investigated the case and Assistant U.S. Attorney Charles F. Connolly and Tax Division Trial Attorney Tracy L. Gostyla, who are prosecuting the case.