Entrenched in underground economy, man goes to jail

|

This item from Justice came out Monday. It’s another example of the law unearthing underground economic activity.
One of the contributing factors to the decline in the state’s labor force in the last year is that people working for cash to avoid taxes are not counted in the monthly jobs report. As a result the numbers look worse than they are.
Other contributing factors are retirement, discouraged workers and people moving out of state.
Anyway, Justice says it found a concrete firm owner who went to some lengths to avoid taxes while working jobs.

OWNER OF CONCRETE COMPANY SENTENCED
TO PRISON FOR $3.7 MILLION TAX EVASION SCHEME

David B. Fein, United States Attorney for the District of Connecticut, announced that DOUGLAS CARTELLI, also known as “Douglas Martin,” 42, of Killingworth, was sentenced today by Chief United States District Judge Alvin W. Thompson in Hartford to 40 months of imprisonment, followed by three years of supervised release, for engaging in an extensive tax evasion scheme.
According to court documents and statements made in court, since 1992, CARTELLI has owned and operated several Connecticut-based concrete companies including DMC Concrete Corp., Commercial Concrete Construction LLC, Commercial Concrete NE LLC and Commercial High Rise Concrete LLC. As part of a scheme to avoid withholding and paying employee taxes, CARTELLI routinely characterized his employees as “independent contractors.” After the U.S. Department of Labor and Internal Revenue Service began an investigation of DMC Concrete, CARTELLI continued to misclassify employees as independent contractors and took steps to make it more difficult for the Department of Labor and the IRS to monitor his companies’ payroll. CARTELLI used a convenience store in Middletown that provided him with cash so he, in turn, could pay his employees in cash, and the store owner was reimbursed by checks from CARTELLI’s business checking accounts. Between July 2004 and February 2008, the store owner received checks from CARTELLI totaling more than $1.15 million.
CARTELLI also convinced the owner of a Middletown liquor store to cash payroll checks for his employees. Each Friday from July 2005 to March 2006, Commercial Concrete NE wired payroll funds into the store’s business checking account. CARTELLI’s employees would go to the store, provide their payroll checks to the store owner and receive cash. The store owner would then return the payroll checks to CARTELLI. During this time period, the store owner withdrew more than $1.266 million in cash that CARTELLI had wired to the liquor store’s bank account.
Over the course of several years, CARTELLI attempted to thwart investigators and evade paying taxes and penalties by twice changing the name of his business and falsely representing to the IRS that he no longer owned the businesses, by writing business checks to his wife or to cash, and by using business checks to pay for numerous personal expenses, including credit card bills, personal real estate taxes and high-end renovations of his home.
The IRS has determined that CARTELLI’s under-reporting of employee wages and payroll taxes, his failure to withhold employment taxes and his failure to pay penalties related to this conduct has resulted in loss to the IRS of more than $3.45 million.
CARTELLI also failed to file personal income tax returns for the 2004 through 2007 tax years, during which he had total taxable income of approximately $959,936.25, resulting in loss to the IRS of $275,275.
Judge Thompson ordered CARTELLI to cooperate with IRS to resolve his outstanding tax liability.
On March 21, 2011, CARTELLI waived his right to indictment and pleaded guilty to three counts of tax evasion.

Rob Varnon

Comments are closed.