As the owner of the Dallas-based staffing company, Pursuit of Excellence, Heaven Marie Diaz ran a going concern with the usual responsibilities to withhold, account for, and pay over employment taxes to the Internal Revenue Service (IRS). Payroll tax payments to the government underpin social safety nets like Social Security, Medicare, and other programs.
As we know, the responsibility for the collection and payment of employer payroll taxes cannot be delegated by a business owner. While the function may be assigned to a vendor or an employee, the business owner remains responsible. This makes certain penalties, like Trust Fund Recovery, a particularly sharp tool for the IRS because it gives the agency the ability to recover personally from owners. In this case, it was Diaz who took the step over the line to benefit from the wage withholding of her employees, not a delegated employee.
Beginning in 2015, Diaz began withholding payroll tax payments to the IRS. She continued this practice until 2017. During that time, she was told by employees and her accountant that she was required to pay employee withholding to the IRS, but failed to do so.
Other than embezzlement by an employee, there are two general reasons a business owner might divert withheld wages from the IRS into their pocket. Some use it as a last-ditch attempt to keep the business afloat, while others seek a bigger payday than they are already getting. For Diaz, it was the latter.
With the $3M that Diaz failed to pay to the IRS, she boosted her lifestyle with luxury purchases, global travel, and rent on a residence in the affluent Dallas neighborhood of Preston Hollow. According to MSN, Diaz defended her purchases as business expenses and noted that the $10,000 rent on the Preston Hollow was legitimate because she staged “murder mystery” parties at the residence as a means of networking.
With the help of the IRS Criminal Investigation Division (CI), Diaz was indicted in 2023. A special agent of the Dallas IRS Criminal Investigation Field Office said of Diaz, “She ignored repeated warnings, misused her position, and treated trust fund taxes like a personal bank account. Today’s sentencing is the result of IRS CI’s relentless investigative work. The women and men of IRS CI will continue working to uphold trust in the tax system and support those who do the right thing.”
After a four-day trial and less than an hour of deliberation, the jury found Diaz guilty of five counts of failing to pay over trust fund taxes. She was sentenced to eight years in prison as well as $799,033.46 in restitution. At 57 years of age, Diaz will have some time to think about her choices and the deep-pocket money she now owes the government.
As criminal tax attorneys, we know that getting quality legal counsel quickly is critical when business owners are engaged in a fraud of some kind, whether it is employment tax embezzlement, misclassification of employees, or another scheme.
In this case, Diaz was warned on multiple occasions about the need to pay over the wages she withheld. Her activity was an open secret, yet she persisted. She opted for a jury trial and was quickly convicted and will go to prison.
If you suspect you are the subject of an IRS criminal investigation, or if you are worried you will be, contact us today. The legal group at Robert J. Fedor, Esq., L.L.C., delivers strong legal representation and support to help clients with options, strategy, and defense. Speak with our knowledgeable tax attorneys today at 440-250-9709. We serve clients across the U.S. and internationally from our offices in Cleveland and Chicago.
But before you do anything else, download our free resource guide, "Employment Tax Fraud: What Every Business Owner Needs to Know." It outlines what triggers investigations, how criminal exposure develops , and what steps to take immediately.