Joseph Schwartz, the owner of Skyline Management Group LLC, has admitted his involvement in a massive $38 million employment tax fraud scheme. The scheme targeted nursing homes owned by Schwartz across the country.
Skyline, headquartered in Wood Ridge, N.J., once operated over more than 100 skilled nursing facilities across 11 states, providing care for over 7,000 seniors at its peak. The company was the target of class action lawsuits related to neglect reports, and issues with staffing and bounced paychecks across states it operated in.
Schwartz pleaded guilty to two counts of an indictment. The charges included willfully failing to pay employment taxes withheld from employees and willfully failing to file an annual financial report for the employee 401K Benefit Plan.
“Joseph Schwartz admitted to defrauding the United States by failing to pay over to the IRS more than $38 million in payroll taxes. As an employer, Schwartz was required to withhold trust fund taxes from his employees’ paychecks and then dutifully report and turn those monies over to the IRS,” U.S. Attorney Philip R. Sellinger said in a press release. “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.”
According to court documents, Schwartz, as the owner of Skyline, was required to collect, account for, and pay over trust fund taxes to the IRS on behalf of employees but failed to do so.
Additionally, Schwartz, as an administrator of Skyline’s employee retirement benefits plan, failed to file an annual Form 5500 financial report for calendar year 2018, despite the obligation to do so.
The employment tax fraud count carries a maximum penalty of five years in prison and a $250,000 fine, or twice the gross gain or loss from the offense, whichever is greatest. The failure to file a Form 5500 related to the retirement plan count carries a maximum potential penalty of 10 years in prison and a $250,000 fine, or twice the gross gain or loss from the offense, whichever is greatest.
Schwartz is scheduled for sentencing in May.
“Schwartz admits he willfully failed to pay over employment taxes, basically stealing money from his employees and the IRS,” FBI – Newark Special Agent in Charge James E. Dennehy said in a press release. “These taxes are an incredibly important facet of how our government functions, making up a significant portion of revenues brought in by the Treasury Department. Other fraudsters currently committing the same fraud should pay attention.”
Companies featured in this article:
Centers for Medicare & Medicaid Services, Skyline Management Group LLC
