A South Florida businessman who operated a community of healthcare corporations has been sentenced to 18 months in federal jail for willfully failing to pay over greater than $10 million in employment taxes and failing to file private earnings tax returns, federal prosecutors introduced Friday.
Paul Walczak, the proprietor and controller of a number of Florida-based healthcare entities, together with Palm Well being Companions and Palm Well being Companions Employment Providers (PHPES), was additionally sentenced to 2 years of supervised launch and ordered to pay $4.38 million in restitution to america.
In accordance with courtroom paperwork, Walczak’s employment agency managed payroll for greater than 600 workers and disbursed over $24 million yearly in wages. As an employer, he was legally obligated to withhold Social Safety, Medicare, and federal earnings taxes from employees’ paychecks and remit these funds—together with the employer’s share of payroll taxes—to the IRS on a quarterly foundation.
As an alternative, over the course of greater than a decade, Walczak repeatedly failed to satisfy his tax obligations. Starting in 2011, he withheld taxes however didn’t pay them over to the IRS. Regardless of a number of makes an attempt by the company to carry him into compliance, together with private conferences and assessments, Walczak resumed the observe of diverting withheld taxes for his personal profit by the tip of 2015.
Between 2016 and 2019, Walczak withheld greater than $7.4 million from worker wages however didn’t ahead these funds to the IRS. Throughout the identical interval, he additionally uncared for to pay over $3.48 million in employer payroll taxes. Prosecutors stated that as an alternative of paying the IRS, Walczak used enterprise funds to counterpoint himself—spending over $1 million on a yacht, transferring giant sums to non-public accounts, and buying at luxurious retailers together with Bergdorf Goodman, Cartier, and Saks.
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By 2019, the IRS had assessed hundreds of thousands in civil penalties in opposition to him. Walczak additionally stopped submitting private earnings tax returns beginning in 2018, regardless of receiving a $360,000 wage from PHPES and taking $450,000 in transfers from his enterprise accounts.
Prosecutors additional revealed that Walczak established a brand new enterprise in 2019, referred to as NextEra, utilizing a member of the family as the bulk nominal proprietor to disguise his management. By NextEra, Walczak funneled practically $1.3 million into members of the family’ accounts and towards private spending, together with clothes and fishing gear.
In whole, Walczak’s actions induced a tax lack of greater than $10.9 million to the IRS.
The sentence was introduced by U.S. Lawyer Hayden P. O’Byrne of the Southern District of Florida, Performing Deputy Assistant Lawyer Normal Karen E. Kelly of the Justice Division’s Tax Division, and IRS Legal Investigation Miami Discipline Workplace Particular Agent in Cost Emmanuel Gomez.
