A Utah couple has pleaded guilty in U.S. District Court to conspiracy for diverting nearly $12 million in employment taxes and projected payroll to their personal accounts.
Steven Christensen and Diane C. Christensen entered a plea agreement this past week in response to a 31-count indictment returned in 2004 including fraudulent receipt of bank funds, conspiracy, signing false tax returns, aiding and assisting in false tax returns and failure to file tax returns.
A statement from the office of District Attorney Paul M. Warner, states the Christensens pleaded guilty to conspiracy to defraud the IRS "by impeding and impairing the lawful functions of the IRS in collecting federal income and employment taxes."
Between 1995 and 1998, the two were principals at various employee leasing and payroll businesses, including Wasatch Management Services, Paragon Business Solutions of America and Professional Staffing Advantages. Diane was president of several additional entities and Steven was employed at and became CEO of the Paragon businesses.
They admitted in their plea agreement that they "knowingly diverted money that Wasatch Management Services had collected for the payment of its employer tax liability," as stated in the district attorney's press release. As a result of their behavior, the business failed to pay its employer taxes to the IRS in 1995 and 1996.
Diane admitted that the tax loss attributable to her conduct is between $2.5 and $5 million. Steven's participation then resulted in a tax loss of between $1.5 and $2.5 million, as stated in the statement.
Following those actions, the Christensens also diverted money from various bank accounts in the businesses names, held at First Utah Bank. These funds, as Warner states, "were used by the Christensens to purchase and build a home, purchase luxury vehicles, stocks and jewelry."
On additional counts, the Christensens admitted to filing false employer tax returns and failed to report income derived from their criminal activity.
The couple agreed to pay restitution to the banks that lost money as a result of their fraudulent conduct. The amount will be determined at a later date. However, a civil case resolved in 3rd District Court between First Utah Bank and the Christensens, refers to "approximately $12 million over which they exercised unauthorized dominion, control and/or use, which were rightly the property of First Utah Bank."
Sentencing is scheduled for Feb. 15, 2006, at 2:30 p.m. The Christensen's each face up to five years in federal prison and a fine of $250,000.