A ‘Cozy’ Crime

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23934745 - close-up of a businesswoman counting bank note at desk

Some employers put entirely unreasonable expectations on their staffs. A recent report by The State Journal-Register details such a case, in which a café owner looking to fudge his business tax numbers coerced his employees into registering the restaurant under their own names. (Exploiting either their fear or their lack of understanding of his criminal intentions.)

Apparently, this café crook’s own business tax number already had been revoked for his failure to pay previous taxes. (”No soup for you!”) So he began reporting sales under former and current employees’ business tax numbers, in his ongoing attempt to skip out on $40,000 in tax payments. Even worse is that he allegedly stole the Social Security number of a disabled former employee, which he fraudulently used to open a utility account.

Luckily, the government caught up with him and made crystal clear the unacceptable nature of his crimes. So unacceptable, in fact, that even though he pleaded guilty to one count each of two felonies (aggravated identity theft and sales tax evasion), he was sentenced to three years in prison. Additionally, he was ordered to pay $44,934 in restitution (check, please!) to the Illinois Department of Revenue and another $2,030 to Ameren Illinois, the utility company that he had defrauded using the disabled employee’s personal information.

It is ironic and counterintuitive for a business owner to disregard the grounds on which he is expected to pay taxes. (What happens to his livelihood if he doesn’t have clean water or trash service?) This particular offender demonstrated an ongoing disrespect for the fundamental responsibilities and privileges that keep alive our economy. He also abused his position of power over his (presumably hourly) employees, including a disabled one who no longer even worked for him. Kudos to the state of Illinois for taking fraud off the menu.

Source: Today’s ”Fraud of the Day” is based on, ”Hillsboro cafe owner pleads guilty to tax fraud,” a staff report published by The State Journal-Register on February 26, 2016.

HILLSBORO — A Montgomery County business owner surrendered today to law enforcement after pleading guilty to evading more than $40,000 in sales tax payments to the state, Attorney General Lisa Madigan’s office announced.

Long Clayton, 50, of Hillsboro pleaded guilty in Montgomery County Circuit Court to one count of sales tax evasion and one count of aggravated identity theft, both of which are Class 2 felonies. Clayton was sentenced to three years in prison and agreed to pay restitution of $44,934.68 to the Illinois Department of Revenue, as well as $2,030.11 to Ameren Illinois.

As the owner of the Cozy Café, 633 S. Main St. in Hillsboro, Clayton allegedly convinced current and former employees to register the café under their names in order to use their Illinois business tax numbers to report sales in an attempt to evade paying more than $40,000 in taxes. Clayton fraudulently used those business tax numbers due to his own tax number being revoked by the Department of Revenue for delinquency in paying previous taxes, the attorney general’s office said.

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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.