Insurance Producer Charged with Failing to Remit $29.5 Million in Payroll Taxes

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US IRS Internal Revenue Service income tax filing form 1040 with supporting documents.

NEWARK, N.J. – A Suffern, New York, insurance producer was arrested today for failing to pay $29.5 million dollars in payroll and unemployment taxes, and benefit plan fraud, U.S. Attorney Philip R. Sellinger announced.

Joseph Schwartz, 62, is charged by indictment with 18 counts of willful failure to pay over employment taxes – totaling $29.1 million – two counts of evasion of unemployment taxes – totaling $367,027 – and two counts of failing to file annual financial reports (Form 5500) with the Department of Labor for the employee 401K Benefit Plan Schwartz sponsored. He is scheduled to appear by videoconference today before U.S. Magistrate Judge André M. Espinosa.

The indictment charges that Joseph Schwartz, the principal owner of Skyline Management Group LLC (Skyline), with its headquarters in New Jersey, willfully failed to pay over Employment and Unemployment taxes relating to the employees at 95 health care and rehabilitation facilities he operated in eleven different states. 

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According to the indictment:

In late 2016, Schwartz and at least one other individual controlled the financing and staffing for Skyline’s various health care facilities around the country, and approximately 15,000 employees who worked there. From mid-2017 through June 2018, Schwartz failed to pay over $29.5 million in payroll and unemployment taxes to the IRS.

Schwartz is also alleged to have failed to file annual financial reports (Form 5500) with the Department of Labor relating to Skyline’s 401K Retirement Plan Contributions that are automatically withdrawn from an employee’s gross pay and invested according to the employee’s own choices. Form 5500 annual financial reports are publicly available and provide participants with the details of the plan’s financial condition, its operation, and its investments.

Each count of willful failure to collect, account for, and pay over employment taxes and tax evasion is punishable by a maximum penalty of five years in prison and a maximum $10,000 fine. The two counts of evasion of unemployment taxes are punishable by a maximum of five years in prison and a maximum fine of $100,000. Each count of 401K benefit plan fraud is punishable by a maximum of 10 years in prison and a $100,000 fine.

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U.S. Attorney Sellinger credited Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division; special agents of IRS-Criminal Investigation, under the direction of Special Agent in Charge Michael Montanez in Newark; special agents and investigators of the U.S. Department of Labor, Employee Benefit Security Administration, under the direction of Thomas Licetti, Regional Director of the New York Office; and special agents of the FBI, under the direction of Special Agent in Charge George M. Crouch Jr., with the investigation leading to the charges.

The government is represented by Senior Litigation Counsel V. Grady O’Malley of the U.S. Attorney’s Organized Crime/Gang Unit and Trial Attorney Shawn Noud of the Justice Department’s Tax Division.

The charges and allegations contained in the indictment are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

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