Scrap Metal Business Owner Pleads Guilty to Tax Evasion

KANSAS CITY, Mo. – Tom Larson, Acting United States Attorney for the Western District of Missouri, announced that the owner of a scrap metal business in Kansas City, Mo., that primarily operated on a cash basis pleaded guilty in federal court today to tax evasion.

Joseph Lee Scott Deardorff, 31, of Kansas City, pleaded guilty before U.S. District Judge Dean Whipple to the charge contained in a Sept. 20, 2016, federal indictment.

Deardorff owns and operates Total Recovery and Recycling, LLC, which is in the business of buying and selling scrap metal and scrap vehicles. By pleading guilty today, Deardorff admitted that he took a series of steps to willfully and intentionally evade payment of $355,310 in federal income taxes and to hide assets from the IRS.

Deardorff specifically pleaded guilty to attempting to evade paying a large part of the federal income tax owed for 2011. According to today’s plea agreement, Deardorff earned $194,067 in taxable income in 2011 and owed $65,067 in federal income tax that year. The total tax loss, including relevant conduct during tax years 2007 through 2012, is $355,310.

Deardorff admitted that he concealed and attempted to conceal from the IRS the nature and extent of his assets. For example, Deardorff cashed (rather than depositing) approximately $731,656 of the $736,070 checks he received from the sale of scrap vehicles and scrap metal in 2011. Deardorff cashed those checks at multiple different gas stations and check cashers throughout the metro area of Kansas City, Mo. He then used that cash to purchase additional scrap vehicles and scrap metal in an effort to hide the money he received from the sale of vehicles and metal from the IRS.

Deardorff also used cash from the sale of scrap vehicles and scrap metal to purchase multiple properties for business and investment purposes, multiple Corvettes for investment purposes, and high-end GPS units, speakers, CD players and DVD players for his tow trucks.

Deardorff, who paid all of his employees in cash, also admitted that he failed to file Forms W2 for any of his employees for calendar year 2011.

Under federal statutes, Deardorff is subject to a sentence of up to five years in federal prison without parole. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory sentencing guidelines and other statutory factors. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.

This case is being prosecuted by Senior Litigation Counsel Gregg R. Coonrod. It was investigated by IRS-Criminal Investigation.