Georgia Businessman Pleads No Contest to Participating in Kickback Scheme and Guilty to Filing False Tax Returns
U.S. Attorney Kenneth A. Polite announced that KENNETH JOHNSON, SR., age 52, of Stone Mountain, Georgia, pled nolo contendere (no contest) on March 16, 2015, to conspiring to pay kickbacks in a federal debris removal contract and guilty to two counts of filing false tax returns with the Internal Revenue Service.
According to court documents, the U.S. Army Corps of Engineers hired a Phillips and Jordan, a national construction firm, to manage the removal of storm debris from the City of New Orleans after Hurricane Katrina devastated the metro area. After they were awarded the contract, Phillips and Jordan hired Company A, a local solid waste management company to assist with the debris removal project. Shortly after securing the contract, Company A hired ANTHONY PENN, a local businessman, to manage the debris removal project for them. After some time on the job, PENN approached the owners of Company A and asked if they would consider hiring his brother-in-law, KENNETH JOHNSON, as a sub-tier subcontractor to work on the project. The owners of Company A accepted the recommendation and hired JOHNSON’s company, KCJ Enterprises, as a sub-tier subcontractor. Sometime thereafter, PENN asked JOHNSON to provide him with a cut of the revenue that KCJ Enterprises was receiving from Company A as a reward for steering the contract to him. JOHNSON agreed to the scheme and wired a total of $236,461.55 in kickback payments to PENN from July 12, 2006, to February 8, 2008.
As part of the investigation, it was determined that JOHNSON filed false tax returns with the IRS for tax years 2007 and 2008 in an effort to conceal the kickback scheme and to avoid paying taxes on his income from the debris removal work. As a result, JOHNSON avoided paying $113,771.00 in federal taxes.
At sentencing, JOHNSON faces a maximum term of imprisonment of five years on the conspiracy charge and a maximum term of imprisonment of three years on the tax charges. U.S. District Judge Stanwood R. Duval, Jr. set sentencing for July 15, 2015.
U.S. Attorney Polite praised the work of the Federal Bureau of Investigations, the United States Department of Defense, and the Internal Revenue Service in investigating this matter. Assistant U.S. Attorneys Spiro G. Latsis and Theodore R. Carter, III are in charge of the prosecution.