Owner of B.P. Security Pleads Guilty in Tax Case
|Jan. 4, 2012|
HOUSTON - Michael Lee Benson has pleaded guilty to willfully failing to account for and pay over taxes withheld from employees of B.P. Security and Investigations Inc., United States Attorney Kenneth Magidson announced today. Benson was the president and sole owner of B.P. Security and Investigations Inc., which provided security guards to businesses in Houston and other cities.
According to the documents in support of his guilty plea, during 2003 through 2006, Benson was the president and sole owner of B.P. Security in Houston and provided security guards to businesses in the Houston area as well as other cities. B.P. Security withheld payroll employment taxes from its employees’ paychecks for the payment of federal income taxes, Social Security and Medicare. B.P. Security was then required to pay these withheld employment taxes to the Internal Revenue Service (IRS) by no later than the end of the month following the end of the yearly quarter in which the employment taxes had been withheld. B.P Security was also required to file a Form 941 Employer’s Quarterly Federal Tax Return (Form 941) and to report the total amount of wages and the employment taxes withheld. B.P. Security withheld employment taxes for its employees for the third quarter of the year 2006, which covered July, August and September 2006.
According to the record of the case, it failed to file its Form 941 when it was due on October 31, 2006, nor did it pay over to the IRS the employment taxes withheld from its employees for the third quarter of 2006 by on or about Oct. 31, 2006. B.P. Security’s Form 941 for the third quarter of 2006 was finally filed with the IRS on Aug. 17, 2007, and was signed by Benson. That Form 941 showed that B.P. Security had withheld employment taxes in the amount of $197,821.30. However, no payment was made to the IRS for those withheld employment taxes at the time the Form 941 was filed, nor have these withheld employment taxes ever been paid to the IRS. In trying to collect those employment taxes, an IRS agent interviewed Benson on Aug. 17, 2007, at which time he admitted he was responsible for making federal tax deposits for B.P. Security for 2003 through 2007. Benson was also later interviewed at which time he stated he was familiar with the forms 941, knew the forms were required to be filed and was aware of an amount due to the IRS, but claimed business cash flow did not allow for the payment of the amount due. Bank records for three different accounts of B.P. Security show that in the months of July, August and September 2006, B.P. Security paid other business expenses in amount exceeding $850,000 when it failed to pay over to the IRS the employment taxes withheld from its employees for those same three months in the amount of $197,821.30. Benson was the only authorized signatory on these bank accounts of B.P. Security.
Pursuant to the terms of the plea agreement, Benson faces a maximum penalty of up to 24 months in prison and a fine up to $10,000 at his sentencing hearing currently set for March 29, 2012, Benson also agrees to make restitution to the Internal Revenue Service in the amount of $1,404,263.29. He is currently on bond pending his sentencing.
The case was investigated by the IRS - Criminal Investigations and is being prosecuted by Assistant United States Attorney John Braddock.
A conviction for conspiracy carries a maximum penalty of five years imprisonment and a fine up to $250,000. Williams and Chilo also face 20 years imprisonment and a fine up to $250,000 for each of the eight counts of wire fraud.
The indictment also contains a notice of forfeiture and seeks forfeiture of $67,950.74, the alleged proceeds of the fraud.
The case was investigated by the United States Secret Service and is being prosecuted by Assistant United States Attorney John Braddock.