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FORMER OWNER OF STOUGHTON TEMPORARY EMPLOYMENT AGENCY SENTENCED FOR UNDER-THE-TABLE SCHEME

October 26, 2011

BOSTON - The former owner of a Stoughton temporary employment agency has been sentenced to seven years in prison for his role in running a $30 million under-the-table payroll scheme. The scheme avoided more than $9 million in federal and state payroll taxes and workers’ compensation insurance premiums.

United States District Court Judge Nathaniel M. Gorton sentenced MICHAEL POWERS of Wesport to 84 months in prison, to be followed by two years supervised release. Judge Gorton ordered POWERS to pay more than $ 9 million in restitution to the Internal Revenue Service, the Massachusetts Department of Unemployment Assistance, and two insurers.

POWERS and JOHN MAHAN of Stoughton were convicted in July 2011, after a jury trial, of one count of conspiracy to defraud the IRS and various workers’ compensation insurers, one count of mail fraud and two counts of filing false tax returns.

Between 2000 and 2004, POWERS and MAHAN owned and operated Commonwealth Temporary Services, Inc., which supplied hundreds of temporary laborers to businesses throughout Eastern Massachusetts. To avoid paying employment taxes, such as Social Security and Medicare, and to fraudulently reduce the businesses’ insurance premiums, POWERS and MAHAN under-reported their payrolls. In order to hide their fraud, they arranged to pay more than $30 million of their payroll in cash, under the table.

In announcing today’s sentence, Judge Gorton commented that POWERS had orchestrated one of the most egregious tax evasion schemes he had come across and noted that the scheme was noteworthy for its brazenness and conniving ways.

JOHN MAHAN is scheduled to be sentenced November 3 at 3 pm.

U.S. Attorney Carmen M. Ortiz; William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston; Richard DesLauriers, Special Agent in Charge of the Federal Bureau of Investigation – Boston Field Office; and Anthony DiPaolo, Chief of Investigations for the Insurance Fraud Bureau of Massachusetts made the announcement today. The case is being prosecuted by Assistant U.S. Attorneys Sarah E. Walters and Vassili Thomadakis of Ortiz’s Economic Crimes Unit.

 

 

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