June 3, 2013
Department of Justice
United States Attorney William C. Killian Eastern District of Tennessee
Paul Adams Sentenced To 36 Months In Federal Prison On Federal Tax Evasion Charges
Second Conviction for Former CPA and IRS Revenue Agent
GREENEVILLE, Tenn.-- On June 3, 2013, U.S. District Judge J. Ronnie Greer sentenced Paul Adams, 69 of Kingsport, Tenn., to serve 36 months in prison for federal tax evasion convictions.
Information at the sentencing hearing revealed that Adams formed a professional employer organization, employing 500 employees for 23 client companies. Adams performed clerical services for the 23 companies, including withholding federal payroll taxes and filing federal payroll tax returns. During a 17-month period of time, Adams calculated and collected the correct amount of withholding and payroll taxes, but reported and paid a much smaller number to the Internal Revenue Service and the Social Security Administration. Adams pocketed more than $2.5 million paid by his client companies and the employees which should have been paid to the Internal Revenue Service.
Adams disclosed his fraud after the IRS selected one of the client companies for random audit. He assisted the IRS in properly reporting the employees’ earnings to the Social Security Administration and assisted the United States in its investigation of others.
Judge Greer ordered Adams to pay restitution to the Internal Revenue Service in the amount of $2,535,745. Judge Greer also ordered Adams to remain on supervised release for three years after his release from prison and imposed special conditions restricting Adams’ ability to conduct any business dealings or offer any professional advice without approval by his probation officer. Judge Greer noted that Adams’ offense was a very serious one based on the circumstances of his conduct and his prior conviction for federal tax fraud in the 1980s. He cited the sophisticated nature of the offense and Adams’ abuse of a position of trust and use of special skills, Adams’ high risk to reoffend in the future, and the need to deter others during the sentencing hearing.
The information and subsequent conviction of Paul Adams was the result of an investigation conducted by the Internal Revenue Service - Criminal Investigation. Assistant U.S. Attorney Helen Smith represented the United States.