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Date: 05-03-2024
Case Style:
Case Number: 4:23-cr-00012
Judge: Robert W. Schroeder, III
Court: The United States District Court for the Eastern District of Texas (Jefferson County)
Plaintiff's Attorney: The United States Attorney’s Office for Beaumont
Defendant's Attorney: Joseph Scott O'Brien
Description:
Former Wise County man sentenced for income tax-related fraud
A former Decatur man, now living in California, was sentenced to federal prison for tax fraud in the Eastern District of Texas.
Kenneth Edward Jackson, 47, pleaded guilty to false statements on income tax return and was sentenced to 36 months in federal prison by U.S. District Judge Robert W. Schroeder, III on May 1, 2024. Jackson was also ordered to pay restitution in the amount of $484,187.57 to the IRS and several of his small-business clients.
According to information presented in court, Jackson was the president and owner of Employer Tools and Solutions (ETS), a payroll service provider that operated in Denton County, Texas. ETS filed Forms 940 and 941 on its clients’ behalf and made payroll and payroll tax payments using funds provided by its clients. Part of ETS’s function in processing its clients’ payroll was holding and remitting employment tax to the Internal Revenue Service for its clients. Employment tax consists of trust fund taxes, which are items withheld from employees’ paychecks, and the employer portion of taxes.
From 2017 to 2019, Jackson embezzled hundreds of thousands of dollars from his small-business clients. He took funds provided by various clients for employment taxes and failed to pay the money over to the IRS. Instead, he kept this money and used it to pay bills—including payments on his home—and to fund his lifestyle—including a European vacation. Jackson also failed to report the client funds he embezzled as income on his U.S. Individual Income Tax return.
“As a payroll service provider, Jackson’s clients trusted him to honestly handle their finances,” said U.S. Attorney Damien M. Diggs. “But Jackson allowed his greed to overtake his fiduciary duties. In addition to defrauding the United States, he also preyed upon his own clients to support his opulent lifestyle. We are grateful for our partners at the IRS, who not only protect our nation’s treasury, but also victims of financial fraud.”
“The failure to pay employment tax has a pernicious effect on the American public. It results in the loss of tax revenue to the United States government and the loss of future social security or Medicare benefits for the employees,” said Christopher J. Altemus Jr., special agent in charge of the IRS Criminal Investigation’s Dallas Field Office. “Instead of paying over the employment taxes received from his clients as part of his payroll business, Mr. Jackson embezzled those funds. He has been held accountable for his actions and sentenced to 36 months in prison and ordered to pay $484,187.57 in restitution.”
This case was investigated by the Internal Revenue Service – Criminal Investigations and the Frisco Police Department and prosecuted by Assistant U.S. Attorney Sean J. Taylor.
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Defendant's Experts:
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