Owner of Michigan Inventory Counting Businesss Pleads Guilty to Tax Fraud
David P. Rowley, a resident of Jackson, Michigan, pleaded guilty yesterday before U.S. District Judge Denise Page Hood to filing a false individual income tax return, announced Kathryn Keneally, the Assistant Attorney General for the Justice Department's Tax Division, and Barbara L. McQuade, the U.S. Attorney for the Eastern District of Michigan.
According to documents filed with the court, between 1999 and 2009, Rowley owned and operated an inventory business for automobile dealerships known as Kennedy Inventory & Service Inc. (KIS). The business also operated under the names D&P Inventory and Spartan in Ohio Inventory. At Rowley’s direction, KIS withheld trust fund taxes, which are the employee portion of Federal Insurance Contributions Act taxes, and employee income tax withholding from his own wages as well as from the wages of the approximately 50-100 employees that it employed at any given time during this period. Also at Rowley’s direction, KIS failed to pay over those trust fund taxes to the Internal Revenue Service (IRS). In addition, Rowley failed to timely file Employer's Quarterly Federal Tax Returns for KIS for quarters during 1999 through 2006 and Individual Income Tax Returns for himself for tax years 2002 through 2007.
In March 2008, Rowley filed 32 delinquent employer tax returns for KIS for years 1999 through 2006 in which he falsely stated that the company had paid over its employees’ trust fund taxes to the IRS when it had not. In November 2008, Rowley filed delinquent individual tax returns for himself for 2002 through 2007. On those returns, he falsely reported that KIS had withheld income taxes from his wages. The tax loss to the government from Rowley’s fraud was between $200,000 and $400,000.
Rowley faces a maximum sentence of three years in prison, one year of supervised release, a $250,000 fine and a $100 special assessment. He has agreed to pay restitution of $303,433.12 to the IRS. Sentencing is scheduled for Sept. 5, 2013.
The case was investigated by special agents of IRS - Criminal Investigation. Trial Attorney Daren Firestone of the Justice Department's Tax Division is prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found at www.justice.gov/tax.