McMechen roofing contractor convicted of fraud

WHEELING, WEST VIRGINIA – Roofing and general contractor Stephen J. Gretchen, 44, of McMechen, West Virginia, was convicted today of failing to report cash payments to his employees and fraudulently collecting insurance benefits for staged damage to his vehicle, United States Attorney William J. Ihlenfeld, II, announced.

Gretchen admitted today that he knowingly underreported the wages, tips, and other compensation that he paid to his employees. He paid certain employees in cash “off the books.” He filed quarterly tax returns which failed to report these cash payments and failed to withhold certain tax amounts on behalf of his employees. In the second quarter of 2011, Gretchen reported that he paid no wages, tips, or other compensation to his employees. In fact, he had paid approximately $22,880.00 to his employees.

Gretchen owned a 2011 Coachman Freedom Express camping trailer. He admitted today that he paid one of his employees to deliberately and repeatedly crash a dump truck into the trailer, causing damage that totally destroyed the camping trailer for insurance purposes. Gretchen filed a claim with his insurance company, but falsely reported that the damage was caused by a hit-and-run accident. The insurance company sent Gretchen a check for $27,776.85 via FedEx in June 2012.

Gretchen pled guilty today to:

• One count of “Filing a False Form 941, Employees’ Quarterly Federal Tax Return” for which he faces up to three years in prison and a fine of up to $250,000.00, and
• One count of “Mail Fraud” for which he faces up to 20 years in prison and a fine of up to $250,000.00.

“Employers, such as Gretchen, that do not pay employment taxes to the government are not only stealing from the American taxpayers, but could be impacting the future benefits their employees are entitled to for their hard work”  stated Thomas J. Kelly, Special Agent in Charge of the Internal Revenue Service-Criminal Investigation, Washington, D.C. Field Office.  “Honest, hardworking citizens should be assured that business owners who are not paying their fair share of taxes will be prosecuted.”

Assistant U.S. Attorney Robert McWilliams is prosecuting the case on behalf of the government. The Internal Revenue Service-Criminal Investigation, the United States Postal Inspection Service, and the West Virginia Offices of the Insurance Commissioner, Fraud Investigation Unit are investigating.

U.S. Magistrate Judge James E. Seibert presided.