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Fraud Friday — Former Bank Vice President Pleads Guilty to Employment Tax Conspiracy

July 28, 2017

By Bob Coleman
Editor, Fraud Friday

Fraud Friday — Former Bank Vice President Pleads Guilty to Employment Tax Conspiracy

Once a small business falls behind on its IRS payroll tax obligations the debt multiplies quickly with interest and added penalties.

And, criminal penalties apply to owners and anyone with signing authority on the checking account. The IRS reasons the small business owner is holding the funds in “trust” for the government, and these payments supersede any business obligations.

Criminal penalties can also extend to third parties — even their small business banker as in today’s case study.

Douglas Corriher was a vice president at a South Carolina-based bank and was aware that a small business loan customer owed more than $1 million in payroll taxes.

From 2009 through 2010, Corriher extended several factoring loans to a bank customer who operated staffing companies in North Carolina. Through the use of nominees, he was also able to circumvent the bank’s legal lending limit.

The staffing company promised its clients that it would pay the payroll taxes for thousands of low-wage temporary workers that it supplied to its clients. The company issued W-2s and filed employment tax returns showing that the funds had been withheld from the wages of the workers.

The payroll taxes were not paid to the IRS.

However, Corriher continued to make advances to the company “knowing that the fund of unpaid payroll taxes would enable the staffing company to repay the loan and allow the bank to continue collecting high rates of interest on the loan advances along with lucrative fees.”

Douglas,68, pled guilty to employment tax conspiracy and faces up to five years in prison, probation, restitution and financial penalties. Sentencing is October 6.

 

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