Defendants Hindered Tax Collection With 'Empty Shell' Corporations

The Justice Department announced this week that a federal court in Oklahoma has permanently barred four Oklahoma City residents -- Joseph Wolf, Cecil Fisher, Louise Qualls, and Eric Wolf -- from operating or working for so-called “professional employer organizations” or “employee leasing” companies.

Judge Joe Heaton of the U.S. District Court for the Western District of Oklahoma entered the permanent injunction also barring the four from operating or working for temporary agencies or payroll-service companies, and requiring that during the next five years they keep the IRS informed of where and for whom they are working.

“The Justice Department is committed to stopping abusive employment-tax schemes,” said Eileen J. O’Connor, Assistant Attorney General for the Justice Department's Tax Division. “Employment-tax schemes rob the federal treasury, leaving law-abiding taxpayers to make up the shortfall.”

The injunctions come as a result of a lawsuit the Justice Department filed in January 2004 accusing the four defendants of using more than 35 shell corporations to evade the payment of nearly $6 million in federal employment and unemployment taxes. Last April, the court entered a preliminary injunction, holding that the defendants’ activities were “designed to frustrate and hinder the ability of the Internal Revenue Service to collect the taxes that are legitimately due.”

“Failure to pay employment taxes is stealing from the employees of the business,” said IRS Commissioner Mark W. Everson. “The IRS pursues business owners who don’t follow the law, and those who embrace these schemes face civil or criminal sanctions.”

Also in April, the IRS warned businesses and individuals to watch for questionable employment-tax practices.

Justice Department trial attorney Hilarie E. Snyder represented the United States in this case, which was investigated by Karen Robinson, a revenue agent with the IRS’s Small Business/Self-Employed Division. More information about the case can be located online.

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