Manassas Business Owner Sentenced for Fraud, Tax Evasion

A Manassas business owner was sentenced Tuesday to a little over four years in prison for his involvement in a mortgage and tax fraud scheme, according to Justice Department officials.

Kevin Leonard Shaffer, 40, of D.C. and Florida, was sentenced to 51 months in prison, followed by five years of supervised release after pleading guilty last November to one count of bank fraud, one count of tax evasion and one count of willful failure to collect and pay over payroll taxes. He was sentenced Tuesday by U.S. District Judge Gerald Bruce Lee, according to officials.

Shaffer was the president and a co-owner of Matrix-DSS, Inc., a sub-chapter S corporation based in Manassas. The company offered consulting services in the Northern Virginia area. 

The bank fraud charge stems from a mortgage fraud Shaffer perpetrated upon the BB&T Corporation: a $5.6 million construction loan for a home in McLean, Va., he signed a loan application for that contained false information and failure to pay taxes.

 Shaffer also submitted fictitious documents to BB&T. The documents included fictitious Internal Revenue Service (IRS) Forms, pay stubs, bank statements and retirement account statements. 

BB&T sustained a loss of $1,815,612 as a result of this fraud.  The total bank fraud loss, which included relevant conduct stemming from additional frauds that Shaffer perpetrated upon other banks, was $2,688,571.93, officials said.

 Shaffer also plead guilty to a tax evasion charge, which involved tax year 2005.  Shaffer did not file a timely tax return for that year, nor did he pay the associated taxes.  The government sustained a $211,865.86 tax loss associated with Shaffer’s actions.  Including relevant conduct pertaining to Shaffer’s tax evasion for tax years 2004, 2006 and 2007, the total tax loss associated with Shaffer’s evasion of taxes was $536,228.77.   

Shaffer also willfully failed to collect, account for and pay employment taxes for Matrix-DSS for the quarters ending Sept. 30, 2006, through Dec. 31, 2007.  It was during this time that Shaffer withheld tax payments from the paychecks of Matrix-DSS’s employees without filing the appropriate tax documents or paying the withheld tax payments or employer’s FICA portions.  The tax loss associated with the willful failure to collect and pay over payroll taxes count to which Shaffer pleaded guilty was $42,320.66.  Including relevant conduct, the total tax loss associated with this conduct was $272,209.14.

The case was investigated by the IRS and U.S. Secret Service Assistant U.S. Attorney Charles F. Connolly and Tax Division Trial Attorney Tracy L. Gostyla prosecuted this case on behalf of the United States.

 Information from: U.S. Department of Justice