Former CFO of North Carolina Assisted Living Facility Chain Pleads Guilty to Tax Fraud Conspiracy
Michael R. Elliott, former chief financial officer of Caremerica Inc., pleaded guilty today to conspiring to defraud the Internal Revenue Service (IRS), the Justice Department and IRS announced.
On Nov. 15, 2011, a grand jury sitting in Raleigh, N.C., returned an indictment charging Elliott with the following tax offenses: one count of conspiring to defraud the IRS, 25 counts of failing to pay over employment taxes, one count of filing a false tax return, and one count of obstructing the due administration of the tax laws.
According to the charging document, Elliott co-owned and operated a chain of assisted living facilities (ALFs) in North Carolina. The ALFs were managed by Caremerica Inc., a company based in Leland, N.C., that Elliott also partly owned and operated. Elliott was the Chief Financial Officer for Caremerica, the Caremerica ALFs, and other related companies (Caremerica companies). As a corporate officer, Elliott was responsible for ensuring that the Caremerica companies collected, reported, and paid over federal employment taxes to the IRS. However, with Elliott as the chief financial officer, the Caremerica companies accrued more than $4.5 million in employment tax liabilities between approximately 2003 and 2006. Elliott failed to comply with his employment tax obligations by filing, and causing to be filed, false IRS forms and failing to pay the employment taxes due.
The indictment further alleges that in 2003, Elliott acquired partial ownership of Partners Pharmacy Services Inc. (PPS), which provided prescription drug and related services to the Caremerica ALFs. In March 2005, Elliott sold PPS to a subsidiary of Omnicare Inc. At the closing, Elliott received $1.4 million, which he directed to be deposited into a bank account in someone else’s name.
At his hearing before Judge James C. Fox, sitting in Wilmington, N.C., Elliott agreed that he should be ordered to pay restitution of $4.8 million. His sentencing is set for the court’s term beginning Nov. 5, 2012.
This case was investigated by IRS-Criminal Investigation. It is being prosecuted by Trial Attorneys Adam Hulbig, Todd Ellinwood and Kevin Lombardi of the Justice Department’s Tax Division.