NEWS RELEASE

FOR IMMEDIATE RELEASE February 06, 2004

CONTACT:

William W. Mercer United States Attorney for the District of Montana (406) 247-4639

 

 

 

RON OMO AND BIG O CONSTRUCTION PLEADS GUILTY IN U.S. FEDERAL COURT

       Bill Mercer, United States Attorney for the District of Montana, announced today that during a federal court session in Billings, on February 5, 2004, before U.S. District Magistrate Judge Richard W. Anderson, RON OMO and BIG O CONSTRUCTION pled guilty to charges of false disclosures. Sentencing is set for May 6, 2004, at 11:00 a.m.

       In an Offer of Proof filed by the United States, the government stated it would prove at trial that OMO and BIG O CONSTRUCTION disclosed false information to the Secretary of the Treasury on Internal Revenue Service Forms 1096 (Annual Summary of Information Returns) by not including Internal Revenue Service Form 1099-Miscellaneous Income, evidencing income received by persons driving vehicles for the benefit of OMO and BIG O CONSTRUCTION, INC.

       The government would have proved that during the relevant time period, OMO was the President and CEO of BIG O CONSTRUCTION, INC. During the 1980's, OMO established a payment system for 36 truck drivers employed by OMO and BIG O CONSTRUCTION, INC. whereby the drivers submitted "driving slips" to bill for driving services and other miscellaneous work provided to BIG O CONSTRUCTION, INC. OMO and BIG O CONSTRUCTION, INC. paid the drivers based upon the driving slips instead of time cards. Under this system, no benefits, unemployment insurance or other employment taxes were paid in connection with the driving slip payments. No year-end summaries "Form 1099's" were issued to the 36 drivers with respect to the work accounted for by "driving slips."

       By not issuing year-end summaries, OMO and BIG O CONSTRUCTION, INC. assisted the drivers in their non-reporting of income when the drivers filed their individual tax returns. The defendants' practice of paying drivers through the use of drivers slips, failing to report the payments to the Internal Revenue Service, and the drivers failing to include the payments on their individual income tax returns, resulted in an aggregate federal income tax loss totaling $21,224.00

       OMO and BIG O CONSTRUCTION, INC. attempted to cover up the payments made to the 36 drivers through the use of internal accounting procedures. BIG O CONSTRUCTION, INC. paid the drivers through the general ledger "travel" and "miscellaneous" expense accounts. This method of expensing payments prevented suspicions being raised by the external CPA firm that prepared year-end tax returns for Big O Construction, Inc. During an interview with criminal investigators, OMO admitted that he instructed his bookkeeper not to issue year end Form 1099 summaries to the drivers. Finally, a check of the records of the Secretary of the Treasury reveals that from January 1995 through February 2000, Big O Construction, Inc. filed Internal Revenue Forms 1096 (Annual Summary of Information Returns) which did not include Internal Revenue Service Form 1099-Miscellaneous Income evidencing income received by the drivers paid by BIG O CONSTRUCTION, INC. through the use of "drivers slips."

       Possible penalties are 1 year in prison and a $50,000 fine.

       Assistant U.S. Attorney Kris McLean prosecuted the case for the United States.

       The investigation was conducted by the Internal Revenue Service.

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       For a copy of the Offer of Proof contact Beth Binstock at (406) 247-4653