Three officials of a Salt Lake payroll services company were indicted by a federal grand jury late Wednesday on allegations that they defrauded nearly 40 clients and misused more than $4.4 million of the clients' money.
The 58-count indictment charged three men associated with Salt Lake-based Advantius Inc. with conspiracy, wire fraud and willful failure to pay withholding and Social Security (FICA) taxes between November 2002 and October 2003. The men charged are Robert J. Stevens, 48, of Salt Lake City, who was chairman of the board, shareholder and primary owner of Advantius; Neal R. Bergstrom, 41, of Sandy, who was chief executive officer; and Kevin T. Anderson, 32, of Salt Lake City, who was controller, vice president of finance and accounting and chief financial officer.
According to the indictment, Advantius, at the hands of the three men, contracted with about 37 companies to perform payroll services, including making the appropriate federal and state tax, Social Security (FICA), federal and state withholding, retirement accounts and Medicare payments. The company used about $4.45 million of the money collected from clients "for purposes other than to pay the clients' payroll withholding and FICA taxes," according to a statement released by the U.S. Attorney's Office.
Further, the indictment states, the men "identified which of Advantius' clients had the largest payroll withholdings and knowingly failed to pay over the payroll and FICA taxes on behalf of those clients," while making assurances — including mail and wire communications — that led those clients to believe that their taxes were being paid to the appropriate agencies. The company continued to pay those taxes on behalf of smaller clients, the court document states.
"Payroll services businesses are responsible for collecting money and paying it to the (Internal Revenue Service) on behalf of their clients," acting U.S. Attorney for Utah Stephen J. Sorenson said in a statement released Thursday. "When individuals involved in the company divert that money to their own use, as is alleged in this case, they have defrauded both their clients and the United States."
Melodie Rydalch, spokeswoman for the U.S. Attorney's Office, said no infor- mation was being released regarding what the men allegedly did with the money.
Neither representatives of the three men nor Advantius could be reached for comment Thursday. The company's telephone number was no longer in service.
The largest client affected was Provo-based MyFamily.
com Inc., which was defrauded of about $2.15 million in the alleged scheme, according to the court document. MyFamily.com spokeswoman Mary-Kay Evans said the company had not yet seen the indictment and therefore could not comment.
A summons will be issued for the three men to appear in federal court. A date was not disclosed. If convicted, the men face up to five years in prison for the conspiracy charge; up to 20 years for each count of wire fraud; and up to three years for each count of failure to pay withholding and FICA taxes.
E-mail: jnii@desnews.com