Department of Justice Seal Department of Justice
FOR IMMEDIATE RELEASE
THURSDAY, JANUARY 15, 2004
WWW.USDOJ.GOV
TAX
(202) 514-2008
TDD (202) 514-1888

JUSTICE DEPARTMENT SUES TO BAR
OKLAHOMA "EMPLOYEE-LEASING" BUSINESSES

Elaborate Corporate Shell Game Allegedly Used To Evade Taxes


WASHINGTON, D.C. - The Department of Justice today filed suit to permanently bar Joseph E. Wolf, Eric Wolf, Louise A. Qualls, Cecil Fisher all from the Oklahoma City area from operating employee leasing companies, also called professional employer organizations (PEOs).

Papers the Justice Department filed in the case allege that, using more than 35 shell corporations, the defendants have evaded collection of nearly $6 million in federal employment and unemployment taxes. According to the papers filed in the case, the four defendants set up (PEOs), which then allegedly entered into "fire-lease back" arrangements with numerous businesses. Under the arrangement, the business fires its employees, and the defendants' PEO hires them and "leases" them back to the business. The court filing also alleges that defendants' corporations have repeatedly fail to pay all federal employment and unemployment taxes owed on wages paid to these employees.

"Putting a stop to employment tax evasion is a high priority for the Justice Department," said Eileen J. O'Connor, Assistant Attorney General for the Justice Department's Tax Division.

The complaint filed today alleges that, over the last three years, the defendants have taken steps to evade IRS collection efforts, including continually setting up new corporations as old ones fail to pay taxes, in "an elaborate corporate shell game in which [the defendants] continually strip debt-ridden PEOs of assets and income." As a result, the Justice Department filing says, the "IRS is faced with the Herculean task of monitoring, tracing, and connecting an ever-changing and increasing number of different corporations" and their shifting assets.

The Justice Department has recently obtained injunctions in a number of employment-tax related cases. Information on some of these cases can be found at:

http://www.usdoj.gov/tax/prtax/txdv03692.htm
http://www.usdoj.gov/tax/prtax/txdv03498.htm
http://www.usdoj.gov/tax/prtax/txdv03412.htm
http://www.usdoj.gov/tax/paysourcepr.htm
Related Documents:

  United States v.
  Joseph E. Wolf, et al.

 

 

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