California CEO Sentenced to Prison for Employment Tax Crimes

A California man was sentenced today to 18 months in prison for employment tax crimes.

According to court documents and statements made in court, Michael Todd Lucas controlled TradeMotion Inc. (TradeMotion), a company that sold software to automotive dealerships. Lucas controlled TradeMotion’s business and financial affairs, and therefore had a legal duty to withhold employment taxes on behalf of the company’s employees and pay those funds to the IRS. From the fourth quarter of 2011 through the third quarter of 2015, Lucas collected more than $2.1 million in withholdings from TradeMotion employees and issued them W-2 forms. However, he paid only $760,017 of these funds to the IRS. Lucas also did not pay to the IRS employment taxes withheld on behalf of the employees of other companies he controlled, causing an additional tax loss of more than $3.5 million.

In addition to the term of imprisonment, U.S. District Judge Anthony J. Battalia ordered Lucas to serve three years of supervised release and to pay approximately $4.9 million in restitution.

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Randy S. Grossman of the Southern District of California made the announcement.

IRS-Criminal Investigation investigated the case.

Trial Attorney Charles A. O’Reilly of the Justice Department’s Tax Division prosecuted the case.