WASHINGTON – A federal court has ordered Advanced Underground Construction LLC and William David Ward II to begin paying employment taxes to the United States on a timely basis, the Justice Department announced today. According to the complaint in a government lawsuit, Advanced Underground Construction is a construction company based in Grimes, Iowa, and Ward is its owner.
The preliminary injunction order, entered by Judge Harold D. Vietor of the U.S. District Court for the Southern District of Iowa, remains in effect while the government’s lawsuit is pending. According to the order, the defendants did not oppose the entry of the injunction, which requires them to deposit and pay the employment taxes, make all related tax return filings, and certify to the government that they have done so. Violation of an injunction can result in civil and criminal sanctions, including fines and imprisonment.
The government complaint alleges that, between the third quarter of 2004 and the present, Ward and the company repeatedly failed to make required employment tax deposits to the United States and instead used taxes withheld from employees’ wages as working capital, a practice sometimes referred to as “pyramiding.” The complaint further alleges that the defendants’ misconduct has resulted in a balance due to the government of more than $370,000, for which the government is seeking a judgment against the company.
In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions prohibiting a wide variety of improper conduct, including the pyramiding of employment taxes. Information about these cases is available on the Justice Department website .