Iowa Businessmen Indicted for Failing to Pay Employment Taxes
CEDAR RAPIDS, IA – A grand jury sitting in Cedar Rapids, Iowa, returned an indictment on January 21, 2016 charging two Iowa businessmen with federal employment tax violations, announced U.S. Attorney Kevin W. Techau for the Northern District of Iowa and Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.
Randy Less, a resident of Hopkinton, Iowa, and Darrell Smith, a resident of Forest City, Iowa, are each charged with multiple counts of willfully failing to collect, truthfully account for and pay over federal income, Social Security, and Medicare taxes that were withheld from the wages of the employees of Permeate Refining, Inc., which was in the business of ethanol production.
According to the allegations in the indictment, Less was the majority owner, a general partner, and the general manager of Permeate Refining, Inc. in Hopkinton, Iowa. In those roles, Less had the responsibility to collect, truthfully account for, and pay over to the Internal Revenue Service (IRS) federal employment, Social Security, and Medicare taxes withheld from the wages of his employees. From approximately the fourth quarter of 2009 and continuing through the fourth quarter of 2010, Less is alleged to have willfully failed to pay over to the IRS more than $116,000 in withheld taxes.
The indictment further alleges that a company called Algae Energae purchased an ownership interest in Permeate in September 2009. After that purchase, it is alleged that Smith, a corporate officer and manager of Algae Energae, also had the responsibility to collect, truthfully account for, and pay over to the IRS taxes withheld from the wages of Permeate’s employees. From approximately the first quarter of 2011 and continuing through the third quarter of 2012, both Less and Smith are alleged to have willfully failed to pay over to the IRS more than $307,000 in withheld taxes.
If convicted, the defendants face a statutory maximum sentence of 5 years in prison and a $250,000 fine for each count.
An indictment is not a finding of guilt. Individuals charged in indictments are presumed innocent until proven guilty beyond a reasonable doubt.
Acting Assistant Attorney General Ciraolo and U.S. Attorney Techau thanked special agents of IRS Criminal Investigation, the FBI, the U.S. Postal Inspection Service, and the U.S. Environmental Protection Agency, who investigated the case and Assistant U.S. Attorney Tim Vavricek of the Northern District of Iowa and Trial Attorney Matthew Hoffman of the Tax Division, who are prosecuting the case.
Court file information at https://ecf.iand.uscourts.gov/cgi-bin/login.pl.
The case file number is 16-CR-2002-LRR.
Follow us on Twitter @USAO_NDIA.