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Justice News

Department of Justice
U.S. Attorney’s Office
District of Delaware

Thursday, June 9, 2016

Delaware Business Owner Sentenced To Prison Term For Skimming Payroll Taxes

WILMINGTON, Del. - Charles M. Oberly, III, United States Attorney for the District of Delaware, announced that Keith D. Clarke, age 53, of Delmar, Maryland, was sentenced yesterday by the Honorable Leonard P. Stark, United States District Judge for the District of Delaware, to a prison term of two months and full restitution.  The defendant pleaded guilty to failure to account for and pay over employment taxes, in December 2015. 

According to Court filings and statements during the plea hearing, the defendant operated a plumbing and air conditioning business in Laurel, Delaware, named Clark Service Group, LLC, from at least 2000 through early 2012.  From the Fourth Quarter of 2009, through the Fourth Quarter of 2011, the defendant withheld at least $131,424.09 in payroll taxes from his employees’ paychecks, but he did not pay those funds over to the Internal Revenue Service.  Also, the defendant failed to pay to the IRS the company own portion of the Payroll Taxes, in the amount of at least $81,192.44, from the Fourth Quarter of 2009, through the Fourth Quarter of 2011. 

At the same time, the defendant withheld retirement plan contributions from his employee’s paychecks, and he failed to remit at least $23,670.00 of these contributions to the retirement plan provider.  Moreover, the defendant failed to remit the Company’s agreed portion of the contributions to the provider, in the amount of $926.70.

Meanwhile, the defendant used company funds to support his personal lifestyle.  For example, the defendant spent nearly $160,000 in company funds to pay for golf excursions, vacations, retail purchases, groceries, dining, and other expenditures of a personal nature.  The defendant failed to file his own personal federal income tax returns for the years 2009, 2010, and 2011. 

U.S. Attorney Oberly stated, “Although the Government sought a sentence of 16 months incarceration, the imposition of a prison term of two months, coupled with restitution and the impact of a felony conviction, will hopefully serve as a deterrent to others who ignore their obligations to properly account for payroll taxes and retirement plan contributions, so as to support a more lavish lifestyle.  My office is committed to prosecuting those who want to cheat the IRS and those who fail to fulfil their tax obligations.”

“Business owners looking to enrich themselves at the expense of their employees by not remitting payroll taxes will be held accountable.  The programs funded by employment taxes are essential to the American workforce and the Internal Revenue Service, Criminal Investigation has placed a high priority on employment tax compliance.” said Special Agent in Charge, Akeia Conner.

This case is the result of an investigation by the Internal Revenue Service, Criminal Investigation, and the U.S. Department of Labor, Office of Inspector General.  This case was prosecuted by Assistant United States Attorney Lauren Paxton.

Financial Fraud
Updated June 9, 2016