San Jose Group Homes Owner Pleads Guilty To Fraud By Diverting Foster Care Funds To Personal Use
SAN JOSE – Annie Corbett, the CEO of her group homes company that provided foster care, pleaded guilty today in federal court to wire fraud and failure to pay over employment taxes, announced United States Attorney Stephanie M. Hinds, FBI Special Agent in Charge Sean Ragan, Internal Revenue Service—Criminal Investigation (IRS-CI) Special Agent in Charge Mark H. Pearson, and U.S. Department Health and Human Services—Office of Inspector General (HHS-OIG) Special Agent in Charge Steven J. Ryan.
Annie Corbett, 55, formerly of Redwood City, was initially charged by federal complaint on October 30, 2020, with wire fraud in connection with her operation of Corbett Group Homes, Inc. (CGH), a company that provided foster care for children and adolescents in group homes located primarily in San Jose. According to the plea agreement entered today, Corbett was the owner, CEO and President of CGH from 2011 through mid-2018, when the business closed. Corbett was the sole signatory on CGH’s bank accounts, was solely responsible for hiring and firing, and was responsible for processing employee payroll. During this time, CGH employed about 60 employees a year.
Corbett admitted in her plea agreement that she knowingly failed to pay employment taxes. She contracted with payroll processing companies to determine the tax withholdings for CGH employees, and Corbett issued paychecks and W-2s to the employees reflecting the withholding of employment taxes. Corbett admitted, however, that she never paid those employment taxes over to the IRS or filed those W-2s with the IRS. Corbett also admitted that she deceived her bookkeeper and CPA into believing the employment taxes had been paid despite not paying any taxes to the IRS. In an example, Corbett described that she issued several checks from a CGH account made out to the U.S. Treasury and gave copies of them to CGH’s bookkeeper to create the appearance that the taxes had been paid. However, instead of providing the checks to the U.S. Treasury, Corbett changed the name of the checks’ payee and deposited the funds into an account she controlled. Corbett admitted in her plea agreement that from 2014 through 2017 she failed to pay employment taxes to the IRS in an amount totaling more than $752,000.
In the plea agreement, Corbett further described the fraud she committed involving funds CGH received directly from local county governments and private charities to support CGH’s care of foster children. Corbett controlled multiple CGH bank accounts and diverted funds deposited in CGH’s business accounts into personal bank accounts. Corbett used the diverted funds for her personal enrichment, including making her own credit card payments, her personal retail business payments, and her payments on a vacation timeshare. Corbett agreed in her plea agreement to a fraud loss amount that exceeded $550,000.
Corbett is next scheduled for a sentencing hearing before United States District Judge Beth L. Freeman in San Jose federal court on January 31, 2023. Corbett remains out of custody pending her sentencing hearing.
Corbett pleaded guilty to one count wire fraud in violation of 18 U.S.C. § 1343. The maximum statutory sentence for a violation of 18 U.S.C. § 1343 is 20 years in prison and a fine of $250,000. Corbett also pleaded guilty to willful failure to pay over employment taxes in violation of 26 U.S.C. § 7202, which carries a maximum statutory sentence of 5 years in prison and a $250,000 fine. However, any sentence following a conviction would be imposed by a court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Assistant U.S. Attorney Anne Hsieh is prosecuting the case, with the assistance of Laurie Worthen. The prosecution is the result of an investigation by the FBI, IRS-CI, and HHS-OIG.