SUDBURY, MA — The owner of a Sudbury accounting firm will serve prison time after being accused of using off-the-books payments and pandemic relief money in a yearslong tax scheme.
Charles D. Katz, 64, was sentenced on Wednesday in federal court in Boston to two months in prison, followed by two years of supervised release, after pleading guilty to conspiracy to defraud the United States and two counts of loan fraud, according to the U.S. Attorney's Office.
Katz owned CD Katz LLC, a Sudbury accounting firm, and Gebsco Realty Corporation, a real estate company.
He and Stephen Hochberg, who served as director of corporate services at the accounting firm and chief operating officer at the real estate firm, agreed to pay Hochberg off the books so Hochberg could receive tax-free income and Katz's companies could pay lower employment taxes, according to federal prosecutors.
Katz paid Hochberg's family, provided rent-free housing to Hochberg's ex-wife, paid college tuition for Hochberg's children and covered personal expenses charged on corporate credit cards, prosecutors said. In all, Katz paid Hochberg at least $1,668,487 in unreported income and avoided at least $835,105 in taxes, according to the U.S. Attorney's Office.
Prosecutors said Katz and Hochberg also fraudulently applied for Paycheck Protection Program loans in 2020 for both of Katz's firms and obtained $179,900. Katz used part of the money to fund the under-the-table compensation paid to Hochberg, according to prosecutors.
As part of the sentence, Katz agreed to pay $333,697.40 in restitution to victims of Hochberg's prior crimes, plus $751,683.62 to the IRS, $83,422 to the Massachusetts Department of Revenue and $179,500 to the Small Business Administration, according to the U.S. Attorney's Office.
Patch previously reported that Hochberg, of Marlborough, was sentenced in April to two years in prison followed by three years of supervised release. He was also ordered to pay $2,888,288 in restitution to the IRS, the state and victims of his prior securities and wire fraud crimes, according to prosecutors.
Hochberg was also convicted in 2008 of eight counts of wire fraud and nine counts of securities fraud, and was sentenced to more than five years in federal prison, according to the U.S. Attorney's Office. Prosecutors said the later tax scheme helped Hochberg avoid paying court-ordered restitution in that earlier case.
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