Date: 01-05-2015

Case Style: United States of America v. Lanny C. McCandles

Case Number: 4:14-cr-00063

Judge: Kenneth Hoyt

Court: United States District Court for the Southern District of Texas (Harris County)

Plaintiff's Attorney: Stephen L. Corso

Defendant's Attorney: Federal Public Defender - Houston

Description: HOUSTON, Harris County, TX – Lanny C. McCandles has been ordered to federal prison after pleading guilty to failing to pay employment taxes, announced U.S. Attorney Kenneth Magidson along with Lucy Cruz, special agent in charge of Internal Revenue Service-Criminal Investigation (IRS-CI).

Today, U.S. District Judge Kenneth Hoyt, who accepted the guilty plea, handed McCandles an 18-month sentence to be immediately followed by three years of supervised release. At the hearing, additional evidence/testimony was presented indicating McCandles had prepared tax returns for several people and had defrauded them by, among other things, taking their refunds. He was further ordered to pay $262,791.28 in restitution.

At the time of his plea Sept. 2, 2014, McCandles admitted that between 2008 and 2011, he embezzled funds withheld from employee paychecks rather than paying them to the IRS as required. He also admitted to attaching fabricated and false IRS W-2 forms to his individual income tax returns as well as returns he prepared and filed on behalf of his girlfriend.

McCandles became the Chief Financial Officer (CFO) of the medical supply company Complete Care Medical Inc. (CCMI) in January 2007. As CFO, he was tasked with keeping CCMI’s books, handling its payroll and preparing and filing its corporate tax returns.

CCMI withheld appropriate federal income, Medicare and Social Security taxes from the paychecks of its approximately 30 employees pursuant to federal law. McCandles was responsible for depositing the withheld taxes to the IRS and filing an Employer’s Quarterly Tax Return (Form 941), which sets forth the total amount of wages and compensation subject to withholding, the total amount of Medicare and Social Security taxes due and the total tax deposits.

Beginning with the quarter ending in March 2008 and continuing through March 2010, McCandles did not deposit these taxes with the IRS nor did he file CCMI’s quarterly tax returns. Instead, he admitted he embezzled the funds CCMI withheld from employee paychecks and used them to pay personal expenses. To carry out and conceal his scheme, McCandles prepared a bi-weekly spreadsheet listing employee payroll expenses for the head of CCMI who then transferred funds to McCandles to cover employee paychecks and withholding. McCandles also prepared the quarterly tax returns and presented them for the signature of CCMI’s head. However, he never filed them.

McCandles admitted he stole the funds earmarked for CCMI’s employment taxes and spent them personally.

Specifically, McCandles pleaded guilty to willfully failing to truthfully account for and pay the IRS approximately $13,624.86 in federal income and FICA taxes withheld from taxable wages of CCMI employees for the first quarter of 2008.

Furthermore, as part of the plea agreement, McCandles admitted he fabricated W-2 Forms and attached them to his personal income tax returns for tax years 2007, 2008 and 2009, resulting in the receipt of refunds to which he was not entitled. For tax years 2007 - 2010, he also admitted to fabricating W-2 Forms and attaching them to tax returns he prepared and filed on behalf of his girlfriend.

McCandles was permitted to remain on bond and voluntarily surrender to a U.S. Bureau of Prisons facility to be determined in the near future.

The charges are the result of an investigation by IRS-CI and the Treasury Inspector General for Tax Administration.

Outcome: See above

Plaintiff's Experts:

Defendant's Experts:

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