Two former executives of first priority pay plead guilty to conspiracy to commit wire fraud and tax fraud
FOR IMMEDIATE RELEASE |
October 21, 2011 |
Clients Lost Almost $1 Million to Alleged Fraud
NEWARK, N.J. – The former vice president of operations and the former director of sales for First Priority Pay (“FPP”), a payroll services company based in Hoboken, N.J., admitted today to defrauding FPP clients of almost $1 million and to failing to pay $400,000 in taxes, U.S. Attorney Paul J. Fishman announced.
Jose Figueroa, 37, and Carlos Chorro, 36, both of Northampton County, Pa., pleaded guilty to Informations charging them with one count each of conspiracy to commit wire fraud and one count each of subscribing to false tax returns. Figueroa and Chorro entered their guilty pleas before U.S. District Judge Susan D. Wigenton in Newark federal court.
According to documents filed in this case and statements made in court:
FPP provided payroll services to its 3,500 clients throughout the United States, including handling the clients’ direct deposits, paycheck services, payroll tax return preparation, and collecting and paying the clients’ payroll taxes to the IRS and the various state taxing authorities.
From January 2008 through November 2009, Figueroa, the vice president of operations for FPP, and Chorro, the company’s director of sales, conspired to enrich themselves by manipulating the FPP computer system to divert FPP clients’ payroll tax funds to bank accounts and monetary devices controlled by Figueroa and Chorro. Specifically, Figueroa, who was responsible for setting up the computer files that allowed money to be transferred from clients’ bank accounts to FPP’s tax accounts and thereafter to the IRS, manipulated the FPP computer files to instead divert clients’ tax funds onto prepaid debit cards controlled by Figueroa and Chorro.
Both Figueroa and Chorro then used the diverted funds for personal expenditures, including ATM cash withdrawals in New Jersey and Pennsylvania. About 128 cash transactions totaling $306,140 were deposited into bank accounts controlled by Figueroa, and 200 transactions totaling $278,125 were deposited into bank accounts controlled by Chorro. From July 2009 through November 2009, Figueroa caused 24 wire transfers totaling $588,366 to be transferred from FPP’s clients’ bank accounts to a bank account controlled by Figueroa. Around September 25, 2009, Figueroa transferred $95,000 by bank check from a bank account controlled by Figueroa to Chorro.
For the tax years 2008 and 2009, Figueroa and Chorro did not disclose to the IRS the income they received in connection with their conspiracy. Figueroa failed to disclose $894,477, resulting in a tax loss to the United States of $278,477. Chorro failed to disclose $373,125, resulting in a tax loss to the United States of $107,184.
As part of their guilty pleas, Figueroa and Chorro have agreed to make full restitution for all losses resulting from their crimes to the victims of their offenses. In addition, Figueroa has agreed to forfeit $438,000 to the United States, and Chorro has agreed to forfeit $184,000 to the United States.
The conspiracy to commit wire fraud charges carry a maximum potential penalty of 20 years in prison and a $250,000 fine or twice the pecuniary gain or loss resulting from Figueroa and Chorro’s criminal conduct. The tax fraud charges carry a maximum potential penalty of three years in prison and a $100,000 fine. The sentencings for before Judge Wigenton are scheduled for Jan. 24, 2012, for Figueroa, and Jan. 25, 2012, for Chorro.
U.S. Attorney Fishman credited special agents of IRS – Criminal Investigation, under the direction of Special Agent in Charge Victor W. Lessoff, for the investigation leading to today’s guilty pleas.
The government is represented by Assistant U.S. Attorney Aaron Mendelsohn of the U.S. Attorney’s Office Economic Crimes Unit in Newark.
This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.
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Defense counsel for Jose Figueroa: Mario Galluci Esq., Staten Island, N.Y.
Defense counsel for Carlos Chorro: Mark J. Fonte Esq., Staten Island, N.Y.
