The Department of Justice (DOJ) announced on July 8 that Santa Clara businessman John Comeau will serve one year and one day in prison for a decade-long scheme to avoid paying employment taxes to the IRS.
Comeau was the CEO of Vivid, Inc., a company that provided metal coating services to industrial customers. The company employed as many as 40 employees at any given time.
Between the first quarter of 2010 and the fourth quarter of 2019, Comeau properly withheld the Social Security, Medicare and federal income taxes of his employees, but then never turned the money over to the IRS. Instead, he filed false quarterly employment tax returns and underreported Vivid’s wages by more than $5 million.
“The timely payment of these taxes is critical to the functioning of the U.S. government, because, for example, they are the primary source of funding for Social Security and Medicare,” said the Department of Justice in its news release. “The federal income taxes that are withheld from employees’ wages also account for a significant portion of all federal income taxes collected each year.”
In some cases, Comeau underreported employees’ wages, negatively impacting their Social Security benefits. The Weekly reached out to the Department of Justice to ask if the employment records had been corrected or if the employees had been made whole. The Department of Justice declined to comment.
The DOJ said Comeau used the money to fund a lavish lifestyle that included a $3 million home and a luxury car. He reportedly cost the United States more than $1.1 million in unpaid monies.
In addition to a prison sentence, U.S. District Judge P. Casey Pitts ordered Comeau to serve three years of supervised release and pay $1,153,948 in restitution to the IRS.
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