States Attorney's Office District of Connecticut
|March 23, 2010||
STAMFORD INVESTMENT FIRM PLEADS GUILTY TO FEDERAL TAX CHARGE
Nora R. Dannehy, United States Attorney for the District of Connecticut, announced that FIRST FUNDING CORPORATION II, of 700 Canal Street, Stamford, waived indictment and pleaded guilty today before Chief United States District Judge Alvin W. Thompson in Hartford to one count of aiding and assisting in the preparation of a false and fraudulent tax return.
According to court documents and statements made in court, FIRST FUNDING CORPORATION II is an investment banking firm that specializes in mergers, acquisitions, divestitures, and seller representation. The Corporation’s sole shareholder is Charles S. Jones, who, in his personal capacity, served on the Board of Directors of a Canadian-based corporation. When incurring expenses in his capacity of a board member of the Canadian-based firm, Jones used a FIRST FUNDING CORPORATION II corporate credit card and a personal credit card to charge the expenses. The credit card charges were paid by FIRST FUNDING CORPORATION II and recorded by the bookkeeper as expenses in the Corporation’s books. Expense reimbursement requests were prepared by Jones’ assistant in the office of FIRST FUNDING CORPORATION II on Jones’ residential letterhead, and then were submitted by Jones’ assistant to the Canadian-based company.
When the requests were paid, Jones directed his assistant to deposit the reimbursement checks into his personal accounts. Neither Jones nor his assistant provided the reimbursement requests or copies of the checks to the FIRST FUNDING CORPORATION II bookkeeper. When the bookkeeper learned that the expense reimbursement checks were going into Jones’ personal accounts rather than the FIRST FUNDING CORPORATION II bank account, the bookkeeper explained to Jones’ assistant that the result would be false bookkeeping figures for FIRST FUNDING CORPORATION II. Neither the bookkeeper nor the assistant discussed the issue with Jones and his assistant continued to deposit the reimbursement checks as Jones had directed.
At the time FIRST FUNDING CORPORATION II provided its financial information to the CPA who prepared the Corporation’s 2002 federal tax return, this issue had not been addressed or corrected. The expense and income figures provided to the CPA by FIRST FUNDING CORPORATION II were used to prepare the Corporation’s 2002 tax return and, as a result, the tax return reported deductions to which FIRST FUNDING CORPORATION II was not entitled, and understated the Corporation’s income. Since FIRST FUNDING CORPORATION II is an S corporation and its income flows through to the sole shareholder, Jones’ individual tax return also reflected understated income.
As a result of the false tax returns prepared for FIRST FUNDING CORPORATION II for the years 2001, 2002, and 2003, Jones’s individual tax returns for the same years reflected under reported income in the approximate amount of $488,477, understating Jones’ tax liabilities by $168,477.
Judge Thompson has scheduled sentencing for June 11, 2010, at which time FIRST FUNDING CORPORATION II faces a maximum penalty of five years of probation and a fine of up to $500,000. In addition, Jones has agreed to pay to the IRS approximately $427,716 in back taxes, penalties and interest.
This case was investigated by the Internal Revenue Service – Criminal Investigation Division. The case is being prosecuted by Assistant United States Attorneys Anastasia E. King and Calvin B. Kurimai.
U.S. ATTORNEY'S OFFICE
Department of Justice
Project Safe Neighborhoods