Administrator/Trustee of retirement trust sentenced for embezzlement and tax evasion
FOR IMMEDIATE RELEASE |
October 13, 2011 |
NEWARK, N.J. – Steven M. Zavidow was sentenced today to 18 months in prison for embezzling $263,000 from a retirement plan he established to benefit his employees and for evading taxes, U.S. Attorney Paul J. Fishman announced.
Zavidow, 52, Hillsdale, N.J., previously pleaded guilty before U.S. District Judge Katharine S. Hayden to an Information charging him with one count each of embezzlement from an employee benefit plan and tax evasion.
According to documents filed in this case and statements made in federal court:
Zavidow owned and operated 11 Burger King restaurants in New York. Each restaurant was separately incorporated. In early 1984, Zavidow and his father, who is not named as a defendant, established the Zavco Industries Retirement Trust (the “Trust”) to provide retirement benefits to the employees of Zavidow’s Burger King restaurants. The Trust was established as a defined benefit plan, with Zavidow’s companies making annual contributions into the Trust on behalf of each employee-participant based on factors that included the employee’s earnings history, tenure of service, and age. The Trust is governed by the Employee Retirement and Security Act of 1974, a federal law that regulates these types of retirement plans.
Zavidow was the Trust’s administrator and a trustee; as such, he was a fiduciary to the Trust, required to act solely in the interest of the Trust’s participants and beneficiaries and prohibited from dealing with the Trust’s assets for his own personal purposes. The Trust maintained a bank account, to which Zavidow was a signatory.
Zavidow admitted that in March 2006, contrary to his fiduciary duties, he embezzled at least $263,000 from the Trust by issuing six checks, drawn on the Trust’s bank account, to himself. Zavidow then deposited these checks in a family member’s bank account or cashed the checks at a check cashing store in Paterson, N.J. On one occasion, Zavidow issued a check, drawn on the Trust’s bank account, to a company with a business bank account controlled by another family member.
Zavidow admitted he embezzled the Trust’s funds by issuing the following checks:
Approximate Date of Check |
Payor |
Payee |
Amount |
Status of Check |
March 2, 2006 |
Trust |
Steven Zavidow |
$130,000 |
deposited into a family member’s bank account |
April 6, 2006 |
Trust |
Steven Zavidow |
$50,000 |
deposited into a family member’s bank account |
May 2, 2006 |
Trust |
Steven Zavidow |
$40,000 |
deposited into a family member’s bank account |
June 13, 2006 |
Trust |
SLZ Processing Corp. |
$25,000 |
deposited into a second family member’s bank account |
August 11, 2006 |
Trust |
Steven Zavidow |
$11,000 |
cashed at check cashing store by Zavidow |
August 30, 2006 |
Trust |
Steven Zavidow |
$7,000 |
cashed at check cashing store by Zavidow |
The Trust currently has a zero balance.
Zavidow also pleaded guilty to tax evasion, admitting that around Oct. 15, 2007, he filed and caused to be filed with the Internal Revenue Service a Form 1040 for tax year 2006 on behalf of himself. On this return, Zavidow declared his taxable income for 2006 was approximately $0, and the amount of tax due and owing was approximately $0.
Zavidow admitted this return did not include $256,000 in additional taxable income he had received in 2006. With this income, an additional tax of $49,493 was due and owing to the United States.
In addition to the prison term, Judge Hayden sentenced Zavidow to three years supervised release and ordered him to pay $425,104 in restitution.
U.S. Attorney Fishman credited investigators from the U.S. Department of Labor–Employee Benefits Security Administration, under the direction of Regional Director Jonathan Kay; special agents from the U.S. Department of Labor-Office Inspector General, Office of Labor Racketeering and Fraud Investigations, under the direction of Special Agent in Charge Robert L. Panella, and special agents from IRS–Criminal Investigation, under the direction of Special Agent in Charge Victor W. Lessoff; with the investigation leading to sentence.
The government is represented by Assistant U.S. Attorney Anthony Moscato of the U.S. Attorney’s Office Organized Crime/Gangs Unit in Newark.
11-409
Defense counsel: Joseph J. Benedict Esq., New Brunswick, N.J.
