Former CFO of Connecticut Healthcare Staffing Agency Sentenced for Tax Offense

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IRS,Tax Check,Filing Taxes,Tax Deadline
IRS,Tax Check,Filing Taxes,Tax Deadline

Leonard C Boyle, Acting United States Attorney for the District of Connecticut, announced that PAMELA SMITH, 72, of Kirkland, Washington, formerly of Guilford, Connecticut, was sentenced today by U.S. District Judge Victor A. Bolden to two years of probation for aiding in the preparation of a false tax return.  Judge Bolden also ordered Smith to perform 100 hours of community service.

Pursuant to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), the sentencing occurred via videoconference.

According to court documents and statements made in court, between approximately 2009 and 2018, Smith was the Chief Financial Officer of Equinox Home Care, LLC (“EHC”), a home healthcare staffing agency based in Stratford, Connecticut.  EHC was established as a partnership between Theresa Foreman and another individual.  In September 2012, the partnership ended, and, by court order, Foreman was obligated to make payments to her partner for the purchase of the partner’s interest in EHC.

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At Foreman’s direction, Smith and EHC’s payroll manager helped Foreman receive money from EHC in a manner that hid the fact that Foreman was the true recipient of the funds.  Beginning in 2012, EHC’s payroll included payments to “ghost employees” who did not work for EHC, and those funds were actually for Foreman’s benefit.  As the CFO of EHC, Smith became aware that the payroll checks were being issued to the “ghost employees” and that EHC and its payroll manager were causing the false payroll checks to be issued.  Smith also assisted Foreman by issuing or causing to be issued bonus checks from EHC to approximately 30 EHC employees.  The employees cashed the checks and provided the cash to Foreman.  Some of the employees later noticed that the amount of funds cashed had been included on their Forms W-2.  Smith would issue a corrected W-2 only if an employee made a request.  Several EHC employees did not request a corrected W-2 and, as a result, overpaid taxes to the IRS.

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In addition, Foreman received funds through cashed mileage checks that were issued to two individuals who did not drive on behalf of EHC.

Smith interacted with the tax return preparer who prepared the partnership tax return in addition to Foreman’s own individual income tax returns, and she failed to inform the return preparer about funds that Foreman received through these various mechanisms.  More than $600,000 of such funds were not reported on Foreman’s 2014 tax return alone.

Smith pleaded guilty to the offense on January 12, 2021.

Foreman pleaded guilty to one count of tax evasion and, on January 6, 2020, was sentenced to 12 months and one day of imprisonment and ordered to pay $641,941.46 in restitution.

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This matter is being investigated by the Internal Revenue Service – Criminal Investigation Division.   This case is being prosecuted by Assistant U.S. Attorneys Jennifer R. Laraia and Peter S. Jongbloed. 

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