Memphis Resident Pleads Guilty to Tax & Embezzlement Charges
Memphis, TN - Venetia Smith, of Memphis, Tennessee, pled guilty today before U.S. District Judge S. Thomas Anderson announced Lawrence J. Laurenzi, United States Attorney for the Western District of Tennessee. Smith pled guilty to four counts of willful failure to collect or pay over tax and one count of theft or embezzlement in connection with health care. Smith faces a maximum penalty of 10 years in prison and a fine of $250,000 when she is sentenced on September 2, 2010.
According to the Information filed for the plea hearing, Smith owned VS Payroll and Tax Service which was contracted by The Health Loop and The Regional Medical Center at Memphis (The MED) to handle payroll services for the Health Loop, including the preparation and filing of federal employment tax returns and payment of employment taxes to the Internal Revenue Service (IRS) on a regular basis. The Health Loop is a group of community-based clinics managed by The Regional Medical Center. As part of the contract with The Health Loop, Smith was responsible for preparing employee payroll checks and withholding federal income tax, as well as Federal Insurance Contribution Act (FICA) taxes, from the paychecks of The Health Loop employees. Smith was also supposed to pay to the IRS the amount of federal income tax withheld and the total FICA taxes owed, file quarterly Forms 941 with the IRS for The Health Loop, and issue annual Forms W-2 to the employees of The Health Loop.
During the plea hearing, the Government credited auditors from The MED with discovering errors in the VS Payroll accounts. The auditors’ discovery led to the Department of Health and Human Services and Internal Revenue Service being contacted to initiate the investigation that led to the charges against Smith. Smith admitted that she failed to pay over to the IRS $61,291.97 in federal tax withholdings and FICA taxes due and owing to the United States on taxable wages paid. Additionally, Smith admitted that she embezzled more than $84,000 belonging to The MED. As part of her plea, Smith agreed to the court ordering her to pay restitution to the IRS.
This investigation was conducted by IRS Criminal Investigation and the U.S. Department of Health and Human Services. Assistant U.S. Attorney John D. Fabian represented the government.
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