Tulsa Software Developer Sentenced to Prison for Payroll Tax Fraud

A computer software development company owner was sentenced Tuesday for failing to account for and pay over employment taxes withheld from his employees’ wages, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney Trent Shores for the Northern District of Oklahoma. 

U.S. District Judge Claire V. Eagan sentenced Earenest J. Grayson Jr. to 24 months in federal prison to be followed by three years supervised release. Judge Eagan further ordered Grayson to pay restitution in the amount of $904,091, representing the amount Grayson failed to pay over for employment taxes withheld from his employees’ paychecks.

“The U.S. Attorney’s Office along with our partners at IRS-Criminal Investigation will ensure that our tax system is equitably enforced throughout northeastern Oklahoma. Grayson broke the law and purposely did not pay taxes owed, including Social Security and Medicare withholdings that will be critical when his employees eventually retire. Grayson will now pay over the nearly $1 million in taxes he neglected to pay and deal with the legal ramifications handed down by the Court for his crimes,” said U.S. Attorney Trent Shores. “I appreciate the team of Assistant U.S. Attorneys and investigators from the IRS who diligently work these white collar cases and hold offenders accountable for the financial losses that are incurred due to their corrupt actions.”

As the owner and operator of Tulsa-based Zealcon Corporation, Grayson was responsible for withholding, accounting for and paying over to the Internal Revenue Service (IRS) payroll taxes and withholdings due on the wages paid to Zealcon employees. For the period, January 2014 through June of 2016. Grayson caused a total tax loss of approximately $1 million by intentionally not paying to the IRS income, Social Security and Medicare taxes withheld from Zealcon employees’ wages and Social Security and Medicare taxes due from Zealcon on those wages.

Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney Shores thanked special agents of IRS-Criminal Investigation, who conducted the investigation, and Tax Division Assistant Chief Andrew Kameros and Assistant U.S. Attorneys Charles McLoughlin and Victor Régal, who are prosecuting the case.

Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.