News and Press Releases

Essex county, n.J., contractor and three employees charged in related tax fraud schemes



FOR IMMEDIATE RELEASE

November 20, 2013


 

Company Worked Extensively on Palmer Square Project in Princeton, N.J.

NEWARK, N.J. – The owner of three Parsippany, N.J.-based construction companies surrendered to federal agents this morning on charges that he failed to collect and turnover federal and state payroll taxes totaling more than $1 million, evaded personal income taxes on more than $1.4 million in income, and falsified reports with respect to union benefit fund contributions, U.S. Attorney Paul J. Fishman announced.

Also, three employees of the construction companies were arrested on charges including filing false income tax returns, bankruptcy fraud, and a mail fraud scheme to defraud the state of New Jersey with respect to unemployment compensation benefits. All four defendants are scheduled to make their initial appearances later today before U.S. Magistrate Judge James B. Clark III in Newark federal court.

According to the three complaints filed in this case:

First Complaint:

Frank Chimento, Jr., 67, of West Caldwell, N.J., was the owner of Chimento Construction, Chimento Construction Services, and FAC Construction, three interrelated and commingled companies specializing in commercial masonry and concrete work (the “Chimento Companies”).  From 2008 through 2011, the Chimento Companies’ primary construction job was the Palmer Square project located in Princeton, N.J. 
 
Chimento Companies allegedly operated a cash payroll for a significant portion of the wages paid to employees during the period 2006 through 2011. Allegedly at Chimento Jr.’s direction, a conspirator (CC-1) who is not named in the complaints conducted structured cash transactions at several separate financial institutions to obtain cash to fund the payroll and in an attempt to avoid currency transaction reports from being filed. CC-1 would then purportedly prepare envelopes containing cash payroll based on the hours and wage rate information provided by Chimento Jr., who, as owner, was responsible for collecting, accounting for and paying over to the IRS withholdings from employees for Social Security, Medicare, and income taxes (collectively referred to as “payroll taxes”).

The complaint also alleges that as early as August 2009, the Chimento Companies have been parties to a collective bargaining agreement (CBA) with the International Union of Bricklayers and Allied Craftworkers, Administrative District Council of New Jersey, consisting of Local Unions 2, 4, and 5 (BAC/ADC), located in Bordentown, N.J. Among other things, the CBA provided that the Chimento Companies must make specified contributions to various BAC benefits funds for each hour of covered work performed by employees of the Chimento Companies. Chimento Jr. was required to complete remittance reports identifying the employees that had performed covered work under the CBA and the number of hours that they worked. According to the complaint, from August 14, 2009, through April 30, 2012, Chimento Jr. failed to make required contributions and caused false statements and representations to be made in remittance reports.

Joseph Carsillo, 45, of East Hanover, N.J., was the project superintendent for the Chimento Companies at Palmer Square. He has worked for the Chimento Companies since 2007. According to the Complaint, Carsillo conspired with Chimento Jr. to defraud the United States with respect to payroll taxes due and owing for the companies’ employees. Carsillo was responsible for keeping track of employees’ hours and would furnish that information to CC-1, which was used to determine the cash wages due to each employee. 

According to the complaint, Carsillo received total cash wages from the Chimento Companies of approximately $167,466 during the years 2009 through 2011, which he failed to include on his personal tax returns for those years.

Second Complaint:

Frank Chimento III, 45, of Verona, N.J., has worked for the Chimento Companies for more than 10 years and was one of the employees that received cash wages.

In 2007, Chimento III briefly operated his own excavation business. An analysis of his bank accounts showed payments in 2007 from the Chimento Companies totaling $85,860. Chimento III filed with the IRS a 2007 Individual Income Tax Return that was not correct as it did not include $45,860 he received from his employment with the Chimento Companies.

He also allegedly willfully did not file individual income tax returns from 2008 through 2011 although he received a Form 1099 for $100,000 in cash wages in 2008, and a total of $351,788 in cash wages during the years 2009 through 2011.

Third Complaint:

Carl J. Corso, 58, of Hamilton Township, N.J., started working for the Chimento Companies on August 12, 2009.

In addition to payroll checks, Corso requested and received cash wages from the Chimento Companies with regard to his employment in 2009 through 2011. Corso disclosed to his return preparer only the wages he received by payroll check and deliberately omitted the cash payments from his personal tax returns despite knowing that the cash should have been included on these returns.   

Corso is also charged with a scheme to defraud the N.J. Department of Labor and Workforce Development (NJDOL-WD) with respect to unemployment compensation benefits.  On Nov. 1, 2009, Corso advised the NJDOL-WD that he was no longer working and reactivated an earlier application for unemployment benefits and was awarded a weekly benefit of $526. He collected a total of $19,988 through the U.S. mail.

The three complaints charge the following offenses:

U.S. v. Frank Chimento Jr. and Joseph Carsillo

Defendant

Counts

Maximum Potential Penalty per Count

Frank Chimento Jr,

Count 1: Conspiracy to defraud the United States

Five years in prison; $250,000 fine or twice the gross gain or loss from the offense

 

Counts 2-15: Failure to collect and pay over payroll taxes

Five years in prison; $250,000 fine or twice the gross gain or loss from the offense

 

Counts 16-19: Mail fraud

20 years in prison; $250,000 fine or twice the gross gain or loss from the offense

 

Counts 20-29: False statements in ERISA documents

Five years in prison; $250,000 fine or twice the gross gain or loss from the offense

 

Counts 30-34: Individual Income Tax Evasion

Five years in prison; $250,000 fine or twice the gross gain or loss from the offense

Joseph Carsillo

Count 1: Conspiracy to defraud the United States

Five years in prison; $250,000 fine or twice the gross gain or loss from the offense

 

Counts 35-37: Filing False Individual Income Tax Returns

Three years in prison; $250,00 fine or twice the gross gain or loss from the offense

 

Count 38: Bankruptcy Fraud

Five years in prison; $250,000 fine or twice the gross gain or loss from the offense

U.S. v. Frank Chimento III

Counts

Maximum Potential Penalty per Count

Count 1: Filing False Individual Income Tax Return

Three years in prison; $250,000 fine or twice the gross gain or loss from the offense

Counts 2-5: Willful Failure to File an Individual Tax Return

One year in prison; $100,000 fine

U.S. v. Carl J. Corso


Counts

Maximum Potential Penalty per Count

Count 1: Mail Fraud

20 years in prison; $250,000 fine or twice the gross gain or loss from the offense

Counts 2-9: Filing a False Individual Tax Return

Three years in prison; $250,000 fine or twice the gross gain or loss from the offense

U.S. Attorney Fishman praised special agents of the IRS-Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen; U.S. Department of Labor, Office of Inspector General, Office of Labor Racketeering and Fraud Investigations, under the direction of Acting Special Agent in Charge Cheryl Garcia New York Regional Office, for the investigation leading to today’s charges. He also thanked the N.J. Department of Labor and Workforce Development, under the leadership of Commissioner Harold J. Wirths for its assistance in the investigation. 

The government is represented by Assistant U.S. Attorney Leslie Faye Schwartz of the U.S. Attorney’s Office Economic Crimes Unit in Newark.

The charges and allegations contained in the complaints are merely accusations and the defendants are considered innocent unless and until proven guilty.

13-442                                                         

Chimento, Frank Jr., and Carsillo, Joseph Complaint
Chimento, Frank III Complaint

Corso, Carl Complaint

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