$250,000 Fine for Meriden Construction Business that Filed False Tax Return: U.S. Attorney

MERIDEN, CT — SRC Construction, Inc., a Meriden-based real estate development and construction management company, has been forced to pay a fine of $250,000 for filing a false tax return, announced United States Attorney Deirdre M. Daly.

According to court documents and statements, SRC Construction "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 owner, and that individual and others "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, according to Daly. The individual, whose identity was not disclosed by prosecutors, also was responsible for providing to the company’s outside accountants all information to prepare audited financial statements and tax returns. And they "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.

On July 15, 2016, the company pleaded guilty to one count of filing a false tax return. The penalty was imposed by U.S. District Judge Stefan R. Underhill.

The $250,000 fine has been paid, according to Daly, as well as the identified back taxes due of $112,609. The company also itemized for the court the various accounting and other internal changes made as a result of the investigation that are intended to ensure future tax and accounting compliance.

The case was investigated by the Internal Revenue Service – Criminal Investigation Division and the Federal Bureau of Investigation, and was prosecuted by Assistant U.S. Attorneys Christopher Schmeisser and Jennifer Laraia.

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