Chief Fraud Officer

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A Chief Financial Officer (CFO) is responsible for multiple things, including controllership duties. This requires the presentation and reporting of accurate and timely historical company financial information. The CFO of a San Francisco Area-based home health care and hospice business failed to carry out this part of his job description and prevented taxes amounting to more than half a million dollars from being paid to the federal government.

The man, who was responsible for collecting, accounting for and paying his company’s employment withholding taxes to the Internal Revenue Service (IRS) carried out his ruse over 18 quarters. He pocketed the corporate funds intended for the IRS and used them to pay for personal expenses including rent, marriage dissolution costs, luxury cars, a motor home and multiple motorcycles. (Sounds like he enjoyed living large at the government’s expense. 

The CFO also caused a payroll service to prepare and file false Employer’s Quarterly Federal Tax Returns. (He told the payroll services company that the home health care services company had paid fewer wages than it actually did.)

The 69-year-old man was charged with making or subscribing false tax returns; willful failure to truthfully account for and pay over taxes; and, structuring transactions to evade reporting requirements. He entered a guilty plea for failing to account for and pay over funds withheld from the wages of his company’s employees as well as trust fund taxes. He was sentenced to 18 months in prison and ordered to pay $495,000 in restitution.

When the former CFO pleaded guilty to one count of willful failure to truthfully account for and pay over taxes, the remaining counts were dismissed. As he heads to prison, his former title has been changed to Chief Fraud Officer. (While this man was previously chief of all financial transactions within the company, it’s doubtful that he will be entrusted with any responsibilities involving money any time soon.)

Source: Today’s “Fraud of the Day” is based on a Department of Justice press release entitled, “Former CFO of Crossroads Home Health Care, Inc. Sentenced to Prison for Tax Crimes,” released on June 6, 2017.

SAN FRANCISCO – Muzaffar Hussain was sentenced today to 18 months in prison and ordered to pay $495,000 in restitution for his failure to account for and pay over trust fund taxes, announced United States Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf. The sentence follows a guilty plea entered last year in which Hussain admitted he did not account for and pay over funds withheld from the wages of employees of Crossroads Home Health Care, Inc. (Crossroads).

Hussain, 69, of Pleasanton, Calif., and Houston, Texas, pleaded guilty on June 10, 2016, to failing to account for and pay over the trust fund taxes. According to the plea agreement, Hussain was the Chief Financial Officer of San Francisco Bay Area-based Crossroads. Hussain admitted that for each pay period between July 1, 2004, and February 27, 2008, he received a Payroll Summary showing wages that had been paid and the employment taxes due. After receiving the Payroll Summary, the defendant transferred funds from Crossroads’ bank account in an amount equal, or close to, the amount of employment taxes, to bank accounts he controlled. Hussain used the transferred monies, including the trust fund taxes, for his own personal use, including funding his other business interests. Defendant also admitted that he intentionally caused a payroll service to prepare and file false Employer’s Quarterly Federal Tax Returns [Forms 941], informing the payroll service that Crossroads had paid fewer wages than it actually paid.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.