Camden Co. Business Owner Imprisoned For Tax, COVID-Relief Fraud

GLOUCESTER CITY, NJ — A Camden County business owner was sentenced Tuesday to 30 months in prison for a series of financial crimes.

John Degan owned and operated Companion Services Group Inc. — a building maintenance and restoration service company in Gloucester City. He previously admitted in federal court to failing to pay income and payroll taxes and fraudulently obtaining COVID-relief funds for his business.

During tax years 2016-20, Degan willfully failed to file payroll tax returns and failed to pay roughly $600,000 in withheld employment taxes on his workers' behalf. The Philadelphia resident tried to conceal more than $4.4 million in wages from the Internal Revenue Service by not filing or submitting W-2 or W-3 forms to the Social Security Administration.

Degan, who received an annual salary of $140,000 to $170,000, also admitted to deliberately failing to file federal income taxes during that time span. He hadn't filed a tax return since 2003. Degan, 69, also failed to file corporate tax returns for Companion, which made more than. $1.4 million in yearly gross receipts.

In April 2020, Degan submitted an application for a Paycheck Protection Program loan on Companion's behalf. The business owner falsely represented to the lender that Companion had employees and payroll expenses at that time. To substantiate the application, Degan submitted various IRS forms showing compensation paid to his employees, but those forms were never actually submitted to the tax agency, according to federal authorities.

Based on Degan’s misrepresentations, the lender approved a PPP loan of $193,407 in federal COVID emergency-relief funds.

Degan pleaded guilty in October to failing to collect, account for, and pay over payroll taxes; failure to file income tax returns with the IRS; and bank fraud. Read more: Camden Co. Business Owner Pleads Guilty To Tax, COVID Loan Fraud

In addition to the prison term, Degan was also sentenced to three years of supervised release. Restitution will be determined in the future.