Payroll Service Provider Indicted For Tax Evasion, Failing To Pay Employment Taxes
MINNEAPOLIS—Yesterday in federal court, Mohamed Abdi, a former payroll service provider, made his initial appearance in connection with an alleged scheme to retain federal income and employment taxes owed to the Internal Revenue Service (“IRS”) by his clients. On April 9, 2012, Mohamed Abdi was charged with four counts of tax evasion and four counts of failure to pay over employment taxes. Abdi was arrested early yesterday.
The indictment alleges that in 2006, Abdi owned and operated Siham Solutions, Inc., a payroll service company, which had numerous clients, including home health care providers. On behalf of several of those clients, Abdi agreed to issue payroll checks to their employees; provide those clients and their employees with an accounting of that pay, including the federal income and employment taxes withheld; submit quarterly reports to the IRS regarding those accountings; and pay to the IRS the federal income and employment taxes withheld and owed by his clients and their employees. Abdi, however, allegedly failed to pay over all of the money owed to the IRS, keeping some or all of it, instead, for his personal use. The total tax loss is estimated at more than $200,000.
In addition, the indictment alleges that Abdi failed to report any of the stolen money on his personal income taxes for tax year 2006. Moreover, on two occasions, he allegedly lied to IRS investigators regarding the fraud.
If convicted, Abdi faces a potential maximum penalty of five years in prison on each count. All sentences will be determined by a federal district court judge. This case is the result of an investigation by the IRS-Criminal Investigation Division. It is being prosecuted by Assistant United States Attorney Michael L. Cheever.
An indictment is a determination by a grand jury that there is probable cause to believe that offenses have been committed by a defendant. A defendant, of course, is presumed innocent until he or she pleads guilty or is proven guilty at trial. Per U.S. Department of Justice policy, the U.S. Attorney’s Office is not allowed to provide the age and city of residence for defendants charged in criminal tax cases.