Bloomberg News

Six Hazardous-Waste Firm Officials Indicted in Tax Fraud

March 29, 2012

Six officials from a hazardous- waste remediation company in upstate New York were arraigned on charges in connection with a tax-evasion scheme, the Justice Department said.

The officers of Niagara Falls-based Sevenson Environmental Services Inc. are accused of conspiring to defraud the Internal Revenue Service by developing a scheme to pay bonuses to themselves and other employees that weren’t reported to the agency, the Justice Department said today in a statement.

The bonus pay, known as “deferred compensation” or “Spanky bucks,” allowed some employees to obtain goods and services that were paid for by the company and not reported to the IRS, such as home improvements, landscaping and airline tickets to Australia and Los Angeles, according to the indictment. The defendants are accused of fabricating documents, falsifying invoices and filing false income tax returns.

“The defendants would and did advise certain employees of their ability to obtain unreported bonus compensation in the form of goods or services that would be paid for by the corporation in lieu of a larger monetary bonus,” according to the indictment. “The defendants would and did cause invoices for personal goods and services to be submitted to Sevenson for payment and to use a corporate credit card to pay for personal expeditures.”

Prison, Fines

Sevenson’s Chief Executive Officer, Michael Elia, of Newfane, New York, was indicted, along with vice presidents Laurence Elia, Richard Elia, Philip DeLuca, Alfred LaGreca and Frank Fracassi, according to the indictment.

The defendants, who were arraigned yesterday before U.S. Magistrate Judge Leslie G. Foschio in Buffalo, face as many as five years in prison and a $250,000 fine if convicted on the conspiracy charge.

Lawyers for the defendants didn’t immediately return telephone messages at their offices seeking comment on the charges. Sevenson didn’t immediately respond to a message left at the company’s headquarters seeking comment.

The company paid $1 million in unreported non-cash bonuses to at least 23 employees from the late 1990s until at least 2007, according to the indictment. A total of about $311,000 in incomes taxes weren’t paid to the IRS.

The case is U.S. v. DeLuca et al, 1:11-cr-00169, U.S. District Court, Western District of New York (Buffalo).

To contact the reporter on this story: Chris Dolmetsch in New York at cdolmetsch@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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