Garrard business owner sentenced for tax fraud
DEPARTMENT OF JUSTICE
LEXINGTON — Clarence Michel Jr., 48, of Lancaster, Kentucky, was sentenced to 71 months in federal prison today, by Chief United States District Judge Karen K. Caldwell, for engaging in a $15 million employment tax fraud scheme and for aiding and assisting in filing false individual tax returns. Michel must also pay the Internal Revenue Service $19,227,376 in restitution. Upon release from prison, Michel will be on supervised release for three years.
According to his plea agreement, Michel was responsible for paying employment taxes for six different staffing companies doing business in the Eastern District of Kentucky. From 2012 through 2016, Michel instructed an employee not to file required tax forms for these companies and not to pay over the employment taxes withheld from employees’ paychecks. The companies failed to pay $14,671,184 in owed federal payroll taxes.
Michel then instructed another employee to pay him money from the company accounts and to make it look in the company books that income taxes were withheld from the money he was taking. This false information was used to create W-2s that made it appear that Michel was meeting his personal tax obligations, when in reality he had underpaid his personal taxes by $2,410,827 over a four-year period.
Robert M. Duncan, Jr., United States Attorney for the Eastern District of Kentucky, and William Chung, Acting Special Agent in Charge, Internal Revenue Service – Criminal Investigation, jointly announced the sentence.
The investigation was conducted by the Internal Revenue Service-Criminal Investigation. Assistant U.S. Attorney Dmitriy Slavin represented the United States.