Tax Fraud

Joseph Schwartz of New York pled guilty to a $38.9 million employment tax fraud scheme within a nursing home. Schwartz admitted that he failed to send payroll taxes to the Internal Revenue Service, and that he failed to file an annual financial report with the U.S Department of Labor for the 401(k) benefit plan of his company, Skyline Management Group LLC. 

Under the revised plea agreement, Schwartz would serve 6 to 18 months in prison with restitution to the IRS of $5 million. Although both parties recommended a 12 month and one day sentence. The previous agreement, which Judge Wigenton rejected in May, was a sentence of 12 months and one day that could not be modified by the judge. After the judge rejected the deal, Schwartz withdrew his first guilty plea.

Following this, Judge Wigenton clarified the sentence range by asking Schwartz, “You are aware that that is a stipulated range that doesn’t bind the court?” Schwartz replied, “Yes, Your Honor.” 

Under the plea agreement, Schwartz willingly admitted to failing to pay the IRS $38,982,016 in employment taxes. Additionally, as administrator of Skyline’s 401(k) retirement savings plan, Schwartz failed to file the required Form 5500 report for 2018 to the Department of Labor. 

Schwartz was the owner of Skyline. According to the U.S attorney’s office, Schwartz had headquarters in New Jersey and held 95 nursing homes in 11 states from October 31st, 2017, through May 30th, 2018. Schwartz admitted he did not send the money to the IRS, though he withheld $38.9 million in taxes from employees. 

The employment tax fraud charge holds up to five years in prison and a $250,000 fine or twice the gross gain or loss. Failure to file a Form 5500 has a maximum penalty of 10 years in prison and a $250,000 fine or twice the gross gain or loss.