Meriden-Based SRC Construction Enters Plea in $300,000 Federal Tax Case

Meriden, CT - SRC Construction, Inc., a Meriden-based real estate development and construction management company, pleaded guilty Friday one count of filing a false tax return to avoid paying taxes on nearly $300,000 in corporate income, announced United States Attorney Deirdre M. Daly.

In addition to paying all back taxes, interest and penalties, SRC has agreed to pay a fine in the amount of $250,000.

• Get Patch's Daily Newsletter and Real Time News Alerts

According to Daly, court documents and statements made in court, the company had an internal accounting department that handled its bookkeeping, bank accounts and other financial matters, with at least one individual who was responsible for overseeing and coordinating those affairs.

"That individual and others under the individual’s control reviewed payments made by the company to employees, vendors and others, and directed how the items should be expensed," Daly wrote in a statement. "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. The individual, who also was responsible for providing to the company’s outside accountants all information to prepare audited financial statements and tax returns, knowingly provided to the accountants a substantial number of non-deductible expenses knowing that they were non-business expenses."

As such, in February 2006, the company "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, according to Daly.

SRC Construction will be sentenced in October by Judge Stefan R. Underhill, at which time the company faces a maximum term of probation of five years and a fine of up to $500,000.

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