Sometimes business owners are tempted to dip into payroll tax withholdings. But a Florida man took payroll tax fraud to a whole new level.
How $20 million in tax fraud fueled a fleet of Ferraris
Matthew Brown is a businessman with a taste for the high life. Brown owned and operated several businesses in the Palm Beach Gardens area, including a payroll servicing company called Elite Payroll. Many businesses outsource their payroll functions, including basic payroll, wage withholding, reporting, and paying over to the Internal Revenue Service (IRS). Elite Payroll was an outsourced vendor that managed payroll for businesses in the areas around Palm Beach, St. Lucie and Martin counties.
For Brown, it was go big or go home. According to the Department of Justice (DOJ), between 2014 and 2022, Brown purloined payroll taxes from the payroll of his business clients and the employees of his own businesses. To the tune of $20 million, Brown collected full employment taxes from his clients and then underreported the liability via fraudulent tax returns to the IRS.
It is not just the size of the take that makes this tax crime stand out, it is the length of time that Brown was able to carry out his scheme. Given that Elite Payroll serviced several businesses and was routinely falsifying reporting, it is odd that the IRS did not catch up to this fraudster sooner.
If not noticed by an eagle-eyed IRS special agent, one might think that the conspicuous consumption of Brown might have tipped off somebody. Brown put his ill-gotten gains right out there in the form of luxury cars, pricey real estate—residential and commercial—a yacht, an airplane, and yes, 27 Ferraris.
But it was all for naught. Brown was eventually nabbed in an IRS criminal investigation. His previously well-shod feet are cooling themselves in prison for a little over four years, after which two years of supervised release await. He will also pay a $200,000 fine and $22,401,585 in restitution for his crimes.
Tax schemes cannot go on forever. Payroll tax problems are routinely picked up by the IRS because they directly involve unsuspecting players. Shopping for your next Ferrari using the payroll taxes from your business? Buyer beware.
Already involved in a payroll tax controversy? We can help
As a business owner, you need to understand regulatory requirements to keep your company compliant. The legal group at Robert J. Fedor, Esq., L.L.C., delivers the guidance needed to keep your tax returns and payroll operations off the radar of the IRS. 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.
If you would like to quietly review a resource to gain a better understanding of what employment tax fraud looks like, download our free eBook, Employment Tax Fraud: What Every Business Owner Needs to Know.
