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Man Pleads Guilty in $38 Million Tax Fraud Scheme Involving NJ Nursing Homes
Joseph Schwartz admits to major employment tax violations in nursing homes nationwide, facing severe penalties.
NEWARK, NJ: Joseph Schwartz, 64, from Suffern, New York, faced the legal consequences of his actions in Newark federal court. He admitted to two counts of a federal indictment for willfully failing to pay employment taxes and neglecting to file a financial report for his employee 401K Benefit Plan. The scheme, involving nursing homes he owned across the country, was scrutinized by U.S. District Judge Susan D. Wigenton.
U.S. Attorney Philip R. Sellinger outlined the gravity of Schwartz's offenses, highlighting the $38 million in payroll taxes not paid to the IRS.
"Schwartz broke the law when he willfully withheld trust fund taxes from his employees but pocketed the money he had withheld rather than turning it over to the government; he will now be held accountable for his criminal tax violations,” Sellinger stated.
Tammy Tomlins, IRS Criminal Investigation Special Agent in Charge of the Newark Field Office, emphasized the importance of tax compliance.
“The defendant cheated taxpayers out of more than $38 million by failing to comply with the taxes he was beholden to pay on behalf of his employees," Tomlins remarked, affirming the IRS's commitment to prosecuting such fraud.
FBI Newark Special Agent in Charge James E. Dennehy also commented on the case, noting the essential role of these taxes in government functioning and warning others against similar fraud.
Key Details:
- Scheme Details: From late 2017 to mid-2018, Schwartz, owner of Skyline Management Group LLC, failed to collect and pay over $38.9 million in trust fund taxes to the IRS on behalf of his employees.
- 401K Plan Negligence: As an administrator of the Skyline 401K plan, Schwartz also neglected his duty to file an annual financial report, worsening his legal troubles.
- Potential Penalties: Schwartz faces up to five years in prison and a significant fine for the employment tax fraud count, and up to ten years for failing to file the retirement plan report.
- Sentencing Date: The court has scheduled sentencing for May 22, 2024.
This case represents a serious breach of legal and ethical duties by an employer. The guilty plea of Joseph Schwartz serves as a stark reminder of the legal obligations businesses have towards their employees and the government. The collaborative investigation efforts of the IRS, Department of Labor, and FBI underscore the commitment of federal agencies to uphold tax laws and protect employee rights.
