Scrap Metal Business Owner Indicted for Tax Evasion
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that the owner of a scrap metal business in Kansas City, Mo., that primarily operated on a cash bases has been indicted by a federal grand jury for tax evasion.
Joseph Lee Scott Deardorff, 31, of Kansas City, was charged in a four-count indictment returned under seal by a federal grand jury in Kansas City, Mo., on Tuesday, Sept. 20, 2016. That indictment was unsealed and made public upon Deardorff’s arrest and initial court appearance.
Deardorff owns and operates Total Recovery and Recycling, LLC, which is in the business of buying and selling scrap metal and scrap vehicles. The indictment alleges that Deardorff took a series of steps to willfully and intentionally evade payment of taxes and to hide assets from the Internal Revenue Service.
During the calendar years 2010 to 2012, the indictment says, Deardorff, received $497,543 in taxable income from 2010 to 2012. Deardorff owed $172,574 in taxes on that income, but willfully and knowingly failed to file accurate tax returns.
Deardorff allegedly attempted to conceal his assets from the Internal Revenue Service. Deardorff cashed approximately $740,547 of the $743,225 worth of checks he received from the sale of scrap vehicles and scrap metal in calendar year 2010, the indictment says. Deardorff cashed the $740,547 checks at multiple gas stations and check cashers throughout the metro area. In 2011 Deardorff allegedly cashed $731,656 of the $736,070 worth of checks received from sales, and in 2012 he allegedly cashed $452,663 of the $453,625 worth of checks he received. All total, for the years 2010 through 2012, Deardorff cashed checks for $1,924,867 of the $1,932,919 of his total receipts.
According to the indictments, when Deardorff sold scrap vehicles and metal, he requested the checks he received be under $1,500 so they would be easier to cash at multiple gas stations and check cashing businesses. Approximately 99 percent of checks made payable to Deardorff or his business from the scrap metal companies were in dollar amounts of $1,500 or less. Deardorff did not deposit into a bank account, the indictment says, but cashed approximately 90 percent of the checks from the scrap metal businesses.
Deardorff allegedly purchased, with cash, all of the scrap vehicles and scrap metal he processed for sale from 2010 through 2012. Deardorff allegedly cashed the checks he received from the sale of scrap vehicles and scrap metal then purchased, with cash, additional scrap vehicles and scrap metal in an effort to hide the money he received from the sale of vehicles and metal from the Internal Revenue Service.
Deardorff also used cash from the sale of scrap vehicles and scrap metal to purchase multiple properties for business and investment purposes, the indictment says, multiple Corvettes for investment purposes, and high-end GPS units, speakers, CD players, and DVD players for his tow trucks.
According to the indictment, Deardorff paid all of his employees in cash from 2010 to 2012. Deardorff allegedly failed to file Forms W2 for any of his employees from 2010 to 2012. The contract labor costs in this matter which were unreported were approximately $172,800.
The federal indictment charges Deardorff with one count of attempting to interfere with the administration of internal revenue laws and three counts of tax evasion.
Dickinson cautioned that the charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.
This case is being prosecuted by Senior Litigation Counsel Gregg R. Coonrod. It was investigated by IRS-Criminal Investigation.