Friday, July 15, 2016
Deirdre M. Daly, United States Attorney for the District of Connecticut, announced that SRC CONSTRUCTION, INC., of Meriden, waived its right to indictment and pleaded guilty today before U.S. District Judge Stefan R. Underhill in Bridgeport to one count of filing a false tax return.
According to court documents and statements made in court, SRC CONSTRUCTION, a real estate development and construction management firm, employed an internal accounting department that handled the general ledger, journal entries and bank accounts for the business, including the receipt and payment of invoices. At least one individual employed by the company was responsible for overseeing and coordinating the business and financial matters for the company’s owner. That individual and others under the individual’s control reviewed payments made by the company to employees, vendors and others, and directed how the items should be expensed. The individual instructed others that most, if not all, invoices be paid out of company funds, including a series of expenses that the individual knew were not deductible business expenses. The individual, who also was responsible for providing to the company’s outside accountants all information to prepare audited financial statements and tax returns, knowingly provided to the accountants a substantial number of non-deductible expenses knowing that they were non-business expenses.
In February 2006, SRC CONSTRUCTION willfully made and subscribed a false corporate tax return, a 2004 Form 1120 for the fiscal year ending April 30, 2005, that overstated expenses. As a result, for the 2004 tax year, the company failed to report corporate income totaling $296,642, resulting in tax loss of $112,609.
Judge Underhill scheduled sentencing for October 21, 2016, at which time SRC CONTRUCTION faces a maximum term of probation of five years and a fine of up to $500,000.
In addition to paying all back taxes, interest and penalties, SRC has agreed to pay a fine in the amount of $250,000.
This case has been investigated by the Internal Revenue Service – Criminal Investigation Division and the Federal Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorneys Christopher Schmeisser and Jennifer Laraia.