Rochester business owner pleads guilty to tax crimes; will pay $11.5 million to the government
ROCHESTER, N.Y. - U.S. Attorney William J. Hochul, Jr. announced that John P. Gizzi, 64, of Rochester, N.Y., pleaded guilty to filing false tax returns in 2008 and 2009 before U.S. District Court Judge Frank P. Geraci. Jr. The charges carry a maximum sentence of six years in prison, a $500,000 fine, or both. In addition, a corporation owned by Gizzi, Rochester Machinery Suppliers, Inc., pleaded guilty to aiding and abetting the preparation of a false tax return.
In addition to paying the $1,901,633 in criminal restitution for taxes that he owes, Gizzi will also forfeit $1,500,000 to the Government in a related proceeding brought by the United States Attorney's Office. Rochester Machinery Suppliers, Inc., Gizzi's corporation, will pay a $500,000 fine for its role in assisting Gizzi's tax crimes. Finally, and as stated in Court today, the defendant will pay $7,623,431 to settle related civil claims with the Internal Revenue Service. This brings the total to be paid by Gizzi to the Government to $11,525,064.
“To hide this amount of money in an effort to avoid paying one’s fair share in taxes is really an insult to all Americans who play by the rules,” said U.S. Attorney Hochul. “Let this case serve as a warning that no one – including the wealthy – is above the law.”
Assistant U.S. Attorney John J. Field, who is handling the case, stated that Gizzi owned and managed several entities, including Rochester Machinery Suppliers, Inc.. The defendant misused his entities to conceal income and artificially inflate expenses in several complex schemes. By misrepresenting the truth on his tax returns, Gizzi evaded paying $1,901,633 in federal income taxes.
One of Gizzi's schemes involved concealing cash compensation that he earned from sales of scrap metal generated by his entities. The defendant obtained at least $1,920,729 in cash from his scrap metal sales, but reported none of it on his tax returns. In another scheme, Gizzi hid and then failed to report, $2,195,084 in income from rent, expense reimbursements and transportation billings generated by his entities. Finally, the defendant used his entities to claim $1,320,638 in bogus expenses that he was not entitled to claim.
U.S. Attorney Hochul noted that today’s convictions represent yet another multi-million dollar judgment impacting the Rochester area, all obtained in the past two months. On May 24, 2013, the Office announced the criminal conviction of ISTA Pharmaceuticals, a company acquired by Bausch + Laumb. The company paid the United States $33.5 million to resolve criminal and civil liability arising from its marketing, distribution and sale of its drug Xibrom.
Last week, the United States Attorney’s Office secured the conviction of Debra Bulter, former Program Administrator for the University of Rochester’s Department of Anesthesiology. Bulter admitted defrauding both the University of Rochester, and a Medical Group, of approximately $3.9 million.
The Gizzi plea is the result of an investigation by Internal Revenue Service, Criminal Investigations, under the direction of Toni M. Weirauch, Special Agent in Charge and the Internal Revenue Service, Large Business and International Division, Financial Services Industry in Upstate New York.
Sentencing is scheduled for November 4, 2013 at 3:00 p.m. before Judge Geraci.