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Thursday, August 20, 2009

New Hampshire, Massachusetts and Rhode Island Residents Arrested for Promoting and Using Tax Defier Schemes

Indictment Alleges Fraudulent Payroll Tax and Fraudulent Warehouse Bank Schemes

BOSTON - Seven individuals from around New England have been indicted in federal court in Boston for conspiracies to defraud the United States through the promotion and use of multiple tax fraud schemes, the Justice Department and the Internal Revenue Service (IRS) announced today.

William Scott Dion and Catherine Floyd, both of Sanbornville, N.H., Charles Adams of Norwood, Mass., and Gary Alcock of Westborough, Mass., were arrested today on charges that they conspired to defraud the United States by promoting and using illegal schemes to defraud the IRS. Arrest warrants have also been issued for Gail and Myron Thorick, both of West Warwick, R.I., and for Kenneth Scott Alcock of Westborough, Mass.

One of the conspiracy counts in the indictment alleges that Dion, Floyd, and Adams ran a payroll tax scheme to pay employees "under the table" without properly accounting for, withholding, and paying over to the IRS the payroll taxes required by law. It is alleged that the three promoted the payroll scheme to employers and individuals who wanted to avoid payment of employer payroll taxes and individual payroll taxes. According to the indictment, the three ran the payroll scheme under three different names: Contract America, Talent Management, and New Way Enterprises. Approximately 150 individuals subscribed to the payroll scheme.

Another of the conspiracy counts in the indictment further alleges that husband and wife Gail and Myron Thorick conspired with Dion and Floyd to defraud the United States by promoting and operated a "warehouse banking" scheme which helped subscribers conceal income and assets from the IRS. According to the indictment, the warehouse scheme operated under three different names: Your Virtual Office, Office Services, and Calico Management. Allegedly, as part of the warehouse banking scheme, the defendants maintained accounts at several banks and used the accounts to deposit and commingle business receipts and other funds received from subscribers in order to mask the true ownership of the funds.

It is alleged that between 2000 and 2005, Gail and Myron Thorick, along with Dion and Floyd, caused more than $16 million to be deposited into the warehouse bank accounts. The indictment further alleges that in order for subscribers to withdraw cash from the accounts, the Thoricks, Dion, and Floyd wrote checks to withdraw substantial amounts of cash, which was subsequently delivered to subscribers wrapped in aluminum foil.

A third conspiracy count alleges that Gary Alcock and his brother, Kenneth Scott Alcock, conspired to defraud the IRS as subscribers to the payroll tax scheme promoted by Dion, Floyd, and Adams. According to the indictment, Gary Alcock owned and operated G&K Trucking Co. and Barkmulch & Loam Co., two businesses located in Shrewsbury, Mass. It is alleged that Gary and Kenneth Alcock created a nominee entity named "Alex Management" to conceal the business activities of G&K Trucking and Barkmulch & Loam, and also retained the services of Contract America to pay employees of these businesses "under the table."

In addition to conspiracies, Dion and Floyd are each charged with one count of obstructing and impeding the IRS; Adams is charged with three counts of tax evasion; Gail and Myron Thorick are each charged with three counts of filing false joint income tax returns ; Gary Alcock is charged with five counts of evading payroll taxes and one count of willfully failing to file a corporate tax return; and Kenneth Scott Alcock is charged with three counts of tax evasion.

If convicted on conspiracy and tax evasion counts, the defendants face up to five years in prison on each count, together with fines of up to $250,000 or twice the financial gain to the defendant or loss to the IRS, to be followed by three years of supervised release. The charges for obstructing the IRS carry maximum penalties of three years in prison, fines of $250,000 and one year of supervised release. False tax return charges each carry a maximum penalty of three years in prison, with fines of $250,000 and one year of supervised release. The failure to file charge carries a maximum one-year prison term, a fine of $100,000 and one year of supervised release.

The case was investigated by Special Agents of the Internal Revenue Service - Criminal Investigation Division. It is being prosecuted by Assistant U.S. Attorney Victor A. Wild of Loucks’ Economic Crimes Division at the U.S. Attorney’s Office in Boston and by Trial Attorneys John N. Kane and Jeffrey L. Shih of the Justice Department’s Tax Division.

The details contained in the indictment are allegations. The defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

Press Release Number: 
Updated September 15, 2014