CONTRACTOR CHARGED WITH TAX FRAUD IN 31-COUNT INDICTMENT

The United States Attorney's Office for the District of Connecticut announced that a federal grand jury in New Haven has returned a thirty-one-count indictment charging KURT C. CLAYWELL, age 52, of 102 North Saddle Ridge Road, Simsbury, Connecticut, on charges of conspiracy to defraud the Internal Revenue Service, making false statements on federal tax returns, conspiracy to commit mail fraud, mail fraud, and illegally possessing a firearm after having been convicted of a felony.

According to the indictment, CLAYWELL is the sole owner of Claywell Electric Co., Inc., and Claywell Inc., electrical contracting firms located in Simsbury, Connecticut.

The indictment charges that CLAYWELL conspired with others to impede the collection of federal income taxes and employment taxes. Among other things, it alleges that CLAYWELL filed false personal income tax returns for himself for the tax years 1996 to 2000. It also charges that he filed false corporate income tax returns and false quarterly employment tax returns for his two corporations.

The indictment further charges that CLAYWELL created false printouts from Claywell Electric's computerized accounting records, which were then submitted to an IRS auditor in 1998. He also allegedly created fake accounting records for his companies to disguise his personal expenses as business expenses. Specifically, the indictment charges that sums spent on a speedboat and household appliances destined for his home and vacation house were recorded as corporate expenses incurred during the construction of the Stamford Courthouse. Further, the indictment alleges that a relative's private school tuition and $33,578.78 towards another relative's birthday party held at the Polytechnic Club in Hartford were logged as expenses incurred during work that was done on the Connecticut Juvenile Training School.

Furthermore, the indictment charges that CLAYWELL formed an off-shore corporation called Inter-Island Holding and Development Incorporated, as well as a fictitious profit-sharing plan in the name of Inter-Island. CLAYWELL allegedly transferred assets into the name of the off-shore company and its profit-sharing plan, but failed to report to the IRS any income derived from those assets. Among these funds, $7,750 was allegedly derived from a claim on an insurance policy in the name of another close relative.

CLAYWELL also allegedly failed to issue Form 1099s to subcontractors who received compensation from his companies. IN addition, he allegedly filed false W-2s for his employees, omitting bonuses and other compensation payments. Furthermore, he allegedly failed to send tax withholdings to the IRS that had been taken from employees' benefit checks.

Moreover, CLAYWELL allegedly altered corporate payroll records to falsely show that an elderly relative had performed journeyman electrician work. This allegedly led to wage checks being issued to the relative, and to those amounts being included on the corporations' quarterly employment tax returns. Specifically, the indictment alleges that on January 4, 2001, corporate records falsely showed that the relative had worked at the Florence Virtue housing project in New Haven.

The indictment also alleges that CLAYWELL manipulated the Work-in-Progress schedule of Claywell Electric's jobs, in order to defer the realization of income on its corporate income tax returns, and to shift job costs among contracts to reduce taxable corporate income.

Besides tax charges, the indictment also alleges that CLAYWELL engaged in mail fraud and conspiracy to commit mail fraud. More particularly, it alleges that CLAYWELL filed a series of false claims against a long-term health care policy in the name of a close relative from April 1999 through October 2000. According to the indictment, each letter falsely claimed that the relative had been living at the McLean skilled nursing facility in Simsbury, Connecticut, and included one or more fabricated McLean invoices.
Finally, the indictment charges that CLAYWELL unlawfully possessed a 9 mm semi-automatic handgun on August 29, 2001, after having been convicted in the United States District Court on October 24, 2000, of pension embezzlement.

If convicted, CLAYWELL faces on each of the conspiracy and mail fraud charges up to five years in prison and a fine of up to $250,000. On each of the charges of filing false tax returns, he faces up to three years in prison and a fine of up to $100,000. On the gun possession charge, he faces up to 10 years in prison and a fine of up to $250,000.

The U.S. Attorney's Office stressed that the indictment is only a charge and not evidence of guilt. The defendant is entitled to a fair trial in which it is the Government's burden to prove guilt beyond a reasonable doubt.

The case is being investigated by the Internal Revenue Service, Criminal Investigation, the Federal Bureau of Investigation, the U.S. Postal Inspection Service, and the U.S. Department of Labor, Employee Benefits Security Administration. The case is being prosecuted by Assistant United States Attorney William J. Nardini.

CONTACT:

U.S. ATTORNEY'S OFFICE
Delcie Thibault
Public Information Office
(203)821-3722 Office
(203)627-1082 Cell