Owner Of Manassas, Virginia, Company Sentenced To 51 Months For Mortgage And Tax Fraud
WASHINGTON - Kevin Leonard Shaffer, 40, of Sarasota, Fla., and Washington, D.C., was sentenced today to 51 months in prison, followed by five years of supervised release, for engaging in mortgage and tax fraud, announced John A. DiCicco, Acting Assistant Attorney General for the Justice Department's Tax Division and Neil H. MacBride, U.S. Attorney for the Eastern District of Virginia.
On Nov. 9, 2010, Shaffer pleaded guilty to one count of bank fraud, one count of tax evasion and one count of willful failure to collect and pay over payroll taxes. Schaffer was sentenced today by U.S. District Judge Gerald Bruce Lee.
Shaffer was the president and a co-owner of Matrix-DSS, Inc., a subchapter S corporation, based in Manassas, Va., that offered consulting services in Northern Virginia. The mortgage fraud charge to which Shaffer pleaded guilty related to a fraud he perpetrated upon BB&T Corporation. In connection with a $5.6 million construction loan for a home in McLean, Va., Shaffer signed a loan application that contained false information. To substantiate this false information, Shaffer submitted to BB&T fictitious documents which falsely created the appearance that he and his wife were regular wage earners with overstated assets. Such documents included fictitious Internal Revenue Service (IRS) Forms W-2, pay stubs, bank statements and retirement account statements. BB&T Corporation sustained a loss of $1,815,612 as a result of this fraud. The total bank fraud loss, which included relevant conduct stemming from additional frauds that Shaffer perpetrated upon other banks, was $2,688,571.93.
The tax evasion count to which Shaffer pleaded guilty involved tax year 2005. Shaffer did not file a timely tax return for that year, nor did he pay the associated taxes. However, during an interview with IRS agents in December 2008, he told agents that he had electronically filed an income tax return for that year and paid the associated taxes by credit card. The IRS finally received a delinquent 2005 tax return from Shaffer in January 2009. This return substantially understated the flow-through income that Shaffer received from Matrix-DSS. The government sustained a $211,865.86 tax loss associated with this conduct. Including relevant conduct pertaining to Shaffer's tax evasion for tax years 2004, 2006 and 2007, the total tax loss associated with Shaffer's evasion of taxes was $536,228.77.
Finally, Shaffer willfully failed to collect, account for, and pay over to the IRS employment taxes for Matrix-DSS for the quarters ending Sept. 30, 2006, through Dec. 31, 2007. In June 2006, Shaffer terminated Matrix-DSS's contract with the company's payroll services provider. During the quarters at issue, Shaffer withheld tax payments from the paychecks of Matrix-DSS's employees. However, he failed to file the requisite IRS Forms 941 or pay the withheld tax payments or employer's FICA portions to the IRS. The tax loss associated with the willful failure to collect and pay over payroll taxes count to which Shaffer pleaded guilty was $42,320.66. Including relevant conduct, the total tax loss associated with this conduct was $272,209.14.
This case was investigated by IRS - Criminal Investigation and U.S. Secret Service agents involved in his case. Assistant U.S. Attorney Charles F. Connolly and Tax Division Trial Attorney Tracy L. Gostyla prosecuted this case on behalf of the United States.