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Press Release

Caguas Resident Indicted For Tax Fraud

For Immediate Release
U.S. Attorney's Office, District of Puerto Rico

SAN JUAN, P.R. – On April 14, 2021, the Federal Grand Jury in the District of Puerto Rico returned a seven-count indictment charging Jose A. Pabón-Sanabria, 50 yrs. old, of Caguas, Puerto Rico, with willfully attempting to evade and defeat the payment of a substantial portion of the employment taxes due to the federal government in violation of 26 U.S.C. § 7201, announced W. Stephen Muldrow, U.S. Attorney for the District of Puerto Rico. This case was investigated by the Internal Revenue Service-Criminal Investigation (IRS-CI).

According to the indictment, Jose A. Pabón-Sanabria operated GAP Security Services, LLC (“GAP”), a security guard business with its principal place of business in Caguas. At the time of the events, GAP employed more than 50 full time employees.

It is alleged that Pabón-Sanabria caused employment taxes, including Federal Insurance Contribution Act (“FICA”) taxes, to be withheld from GAP’s employees’ wages, but failed to fully pay the taxes to the IRS from the first quarter of 2014 through the third quarter of 2015, among other employment tax quarters. As a result, Pabón-Sanabria failed to pay the IRS in excess of $262,000 in employment taxes for GAP employees.

The Internal Revenue Service (“IRS”) is an agency within the Department of Treasury responsible for administering and enforcing the tax laws of the United States, and collecting taxes owed to the Treasury of the United States by its citizens and other entities.

The Internal Revenue Code and associated statutes and regulations requires employers to withhold from employees’ gross pay federal income taxes and FICA taxes, which represent Social Security and Medicare taxes, and to account for and pay the withheld taxes to the IRS on a quarterly basis. These taxes are held in trust for the United States by the employer and required to be paid for the benefit of employees.

In addition to the taxes that must be withheld from pay, employers are separately required to make contributions under FICA for Social Security and Medicare in amounts matching the amounts withheld from their employees’ pay for those purposes. Together, they are commonly referred to as “employment taxes.”

“Employers such as Pabón Sanabria are required by law to withhold taxes from their employees’ wages, hold those funds in trust, and pay over those funds to the IRS,” said U.S. Attorney Muldrow.  “Willful failure to comply with this requirement is a crime. Those individuals who choose to maintain their business and line their pockets with the trust funds of their employees are stealing from the U.S. Treasury –and will face substantial consequences including incarceration.”

Violations of 26 U.S.C. § 7201 carry a penalty of imprisonment for up to 5 years and three years of supervised release, along with a fine.

This case is being investigated by IRS-CI and prosecuted by Assistant United States Attorney María L. Montañez-Concepción.

An indictment is only an accusation and not evidence of guilt. A defendant is presumed to be innocent unless and until proven guilty.

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Updated April 16, 2021

Financial Fraud