Former Head Of Yonkers Republican Party Pleads Guilty In White Plains Federal Court To Payroll Tax Fraud

Preet Bharara, the United States Attorney for the Southern District of New York, Toni Weirauch, the Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), and George Venizelos, the Assistant Director-in-Charge of the New York Field Division of the Federal Bureau of Investigation (“FBI”), announced that former City of Yonkers Republican Party Chairman ZEHY JEREIS pled guilty today in White Plains federal court to a one-count Information charging him with failing to pay more than $60,000 in payroll taxes to the IRS. JEREIS surrendered this morning in the federal courthouse in White Plains and was presented and arraigned before U.S. Magistrate Judge George A. Yanthis. The case was assigned to U.S. District Judge Edgardo Ramos, who presided over the guilty plea hearing this morning.

Manhattan U.S. Attorney Preet Bharara stated: “On the very day he is surrendering to serve a prison term of 48 months in connection with his conviction on public corruption charges, Zehy Jereis is back in court admitting he defrauded the IRS. Mr. Jereis has a lot to answer for, and today he begins doing so.”

IRS Special Agent-in-Charge Toni Weirauch stated: “The tax law is very clear – employers are responsible for withholding employment taxes from the salaries of their employees. IRS-Criminal Investigation takes payroll tax fraud seriously because it both deprives the United States government of tax revenue and it reduces the future benefits that employees would otherwise be entitled to, including Social Security and Medicare.”

FBI Assistant Director-in-Charge George Venizelos stated: “Jereis, in two separate cases, has been shown to have used a business plan that included cheating. Businessmen who succeed by committing tax fraud and bribing public officials don’t earn our admiration; they go to prison.”

According to the Information and statements made during today’s proceeding:

JEREIS was a part owner and operator of a combination car wash, gas station, auto repair shop, and convenience store located in Brooklyn, New York, known as Atlantic Gas and Wash, LLC (“Atlantic”). Atlantic employed a substantial number of employees to wash and repair cars and to sell gasoline and other products at the convenience store. As an employer, JEREIS was obligated to withhold and pay to the IRS certain payroll taxes and to file accurate quarterly payroll tax forms that reported the wages and other compensation received by employees of Atlantic, and the taxes withheld.

During the tax years 2007 through 2009, JEREIS paid numerous employees of Atlantic, including undocumented aliens, a total of at least $403,127 in cash and failed to report such cash payments to the IRS. He did so in order to avoid his legal obligation to withhold taxes and to pay approximately $61,678 in payroll taxes to the IRS.

JEREIS, 41, of Scarsdale, New York, pled guilty to one count of aiding and assisting in the preparation of false and fraudulent payroll tax returns. He faces a maximum sentence of three years in prison and a maximum fine of the greater of $250,000 or twice the gross gain derived or loss that resulted from the crime. JEREIS will be sentenced by Judge Ramos on June 4, 2013 at 11 a.m.

On March 29, 2012, after a seven-week jury trial before U.S. District Judge Colleen McMahon, JEREIS was convicted of conspiracy, bribery, and extortion in connection with a scheme to bribe a Yonkers City Councilwoman to flip her vote on two real estate development projects. On November 19, 2012, JEREIS was sentenced in that case to 48 months in prison. He is scheduled to begin serving that sentence today.

Mr. Bharara praised the work of the IRS-Criminal Investigation and the FBI in the investigation.

This case is being handled by the Office’s White Plains Division. Assistant U.S. Attorneys Perry A. Carbone and Jason P.W. Halperin are in charge of the prosecution.

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Preet Bharara, the United States Attorney for the Southern District of New York, Toni Weirauch, the Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), and George Venizelos, the Assistant Director-in-Charge of the New York Field Division of the Federal Bureau of Investigation (“FBI”), announced that former City of Yonkers Republican Party Chairman ZEHY JEREIS pled guilty today in White Plains federal court to a one-count Information charging him with failing to pay more than $60,000 in payroll taxes to the IRS. JEREIS surrendered this morning in the federal courthouse in White Plains and was presented and arraigned before U.S. Magistrate Judge George A. Yanthis. The case was assigned to U.S. District Judge Edgardo Ramos, who presided over the guilty plea hearing this morning.

Manhattan U.S. Attorney Preet Bharara stated: “On the very day he is surrendering to serve a prison term of 48 months in connection with his conviction on public corruption charges, Zehy Jereis is back in court admitting he defrauded the IRS. Mr. Jereis has a lot to answer for, and today he begins doing so.”

IRS Special Agent-in-Charge Toni Weirauch stated: “The tax law is very clear – employers are responsible for withholding employment taxes from the salaries of their employees. IRS-Criminal Investigation takes payroll tax fraud seriously because it both deprives the United States government of tax revenue and it reduces the future benefits that employees would otherwise be entitled to, including Social Security and Medicare.”

FBI Assistant Director-in-Charge George Venizelos stated: “Jereis, in two separate cases, has been shown to have used a business plan that included cheating. Businessmen who succeed by committing tax fraud and bribing public officials don’t earn our admiration; they go to prison.”

According to the Information and statements made during today’s proceeding:

JEREIS was a part owner and operator of a combination car wash, gas station, auto repair shop, and convenience store located in Brooklyn, New York, known as Atlantic Gas and Wash, LLC (“Atlantic”). Atlantic employed a substantial number of employees to wash and repair cars and to sell gasoline and other products at the convenience store. As an employer, JEREIS was obligated to withhold and pay to the IRS certain payroll taxes and to file accurate quarterly payroll tax forms that reported the wages and other compensation received by employees of Atlantic, and the taxes withheld.

During the tax years 2007 through 2009, JEREIS paid numerous employees of Atlantic, including undocumented aliens, a total of at least $403,127 in cash and failed to report such cash payments to the IRS. He did so in order to avoid his legal obligation to withhold taxes and to pay approximately $61,678 in payroll taxes to the IRS.

JEREIS, 41, of Scarsdale, New York, pled guilty to one count of aiding and assisting in the preparation of false and fraudulent payroll tax returns. He faces a maximum sentence of three years in prison and a maximum fine of the greater of $250,000 or twice the gross gain derived or loss that resulted from the crime. JEREIS will be sentenced by Judge Ramos on June 4, 2013 at 11 a.m.

On March 29, 2012, after a seven-week jury trial before U.S. District Judge Colleen McMahon, JEREIS was convicted of conspiracy, bribery, and extortion in connection with a scheme to bribe a Yonkers City Councilwoman to flip her vote on two real estate development projects. On November 19, 2012, JEREIS was sentenced in that case to 48 months in prison. He is scheduled to begin serving that sentence today.

Mr. Bharara praised the work of the IRS-Criminal Investigation and the FBI in the investigation.

This case is being handled by the Office’s White Plains Division. Assistant U.S. Attorneys Perry A. Carbone and Jason P.W. Halperin are in charge of the prosecution.

U.S. v. Zehy Jereis Information