Lexington Business Owner Sentenced for Failing to Pay $1.7 Million in Payroll Taxes
KANSAS CITY, Mo. – A Lexington, Mo., business owner was sentenced in federal court today for failing to pay over to the IRS nearly $1.7 million in payroll taxes.
Randy K. Small, 51, of Lexington, was sentenced by U.S. District Judge Gary A. Fenner to three years in federal prison without parole. The court also ordered Small to pay $1,694,725 in restitution.
On June 20, 2017, Small pleaded guilty to failure to pay over to the IRS the payroll taxes of his employees.
Small is the owner of RSB Leasing, a transportation business that has provided school bus service to multiple school districts in Missouri (including the Buchanan County R-IV School District, the Lexington, Mo., R-5 School District and the Hardin-Central C-2 School District). Small operated the business under three different names, and failed to fully pay employment taxes for each of the three businesses. At the time of his guilty plea, Small admitted that his criminal conduct resulted in an aggregate tax loss of at least $1,457,483.
According to court documents, however, Small has continued to violate tax laws since his change-of-plea hearing. IRS investigators uncovered $237,242 in additional tax harm for employment taxes that were not paid over to the IRS for employees of RSB Leasing, resulting in a total tax liability amount of $1,694,725.
Small operated the business under the name Hill Transportation, Inc., from 2005 through February 2010. After accruing over $300,000 in employment tax liability, Small discontinued operations under Hill Transportation and began operating under the name SPYKE, LLC. After accruing over $1 million in employment tax liability, Small discontinued operations under SPYKE in 2012. Finally, Small operated under the name RSB Leasing which has continued to accrue tax liability.
Small admitted that he did not deposit the Federal Insurance Contributions Act and Medicare (FICA) taxes or the income taxes that he withheld from his employees’ wages, nor did he pay the employer portion of FICA.
While accruing employment tax liabilities, Small withdrew significant amounts of cash, purchased new buses and maintained a personal collection of cars. From 2009 through 2011, Small withdrew $286,052 from the business bank account in the form of cash and cashier’s checks payable to himself. Small spent an additional $147,000 to purchase new buses for the business.
During the time period when Small was not paying his taxes, he purchased and maintained a 1998 Lamborghini Diablo SV. On April 13, 2017, about two months prior to his guilty plea, Small sold the Lamborghini for approximately $115,000 and had the proceeds from the sale wired to the business bank account of RSB Leasing. Small failed to disclose the transaction to the government and he has not used any of the proceeds to pay the taxes he owes. Instead, according to documents provided by the IRS, Small engaged in a series of banking transactions to further conceal the proceeds and evade payment to the IRS.
According to court documents, Small filed for bankruptcy with the intent to hinder the collection efforts of the IRS and obstruct the IRS’s ability to collect payment from the foreclosure sale of a parcel of land. The bankruptcy petition was dismissed on Oct. 30, 2017.
This case was prosecuted by Assistant U.S. Attorney Brent Venneman. It was investigated by IRS-Criminal Investigation.