Damian Williams, United States Attorney for the Southern District of New York, and Thomas Fattorusso, Acting Special Agent in charge of the New York Internal Revenue Service Field Office, Criminal Investigation (“IRS-CI”), have announced today the unsealing of a federal indictment accusing JOSEPH EUGENE LEMAY, alias “Gene Lemay”, and JOEL LINGAT of criminal tax offenses. LEMAY is the former president of a company which provides moving and storage services (“Company-1”), and LINGAT is the accountant of Company-1. LEMAY and LINGAT are said to have conspired to carry out a long-standing scheme to evade more than approximately $ 7.8 million in federal payroll taxes owed by Company-1 and its affiliates to the Internal Revenue Service (“IRS”). LEMAY is also accused of evading his personal income taxes. LINGAT had already been arrested in this affair; LEMAY attended the federal courthouse today and is expected to be presented this afternoon on the charges in the indictment. The case is assigned to US District Judge Mary Kay Vyskocil.

Mr. Williams and Mr. Fattorusso also today announced the previously entered guilty pleas of SALMAN RAMI HAIM, former President of Company-1, and NISSIM FADIDA, current President of Company-1. HAIM and FADIDA have previously admitted to participating in the payroll tax evasion conspiracy while employed by Company-1. The case against HAIM and FADIDA is attributed to US District Judge Ronnie Abrams.

US Attorney Damian Williams said: “As alleged, Gene Lemay and Joel Lingat conspired to defraud the United States and evade nearly $ 8 million in payroll taxes by setting up shell companies and pretending that employees of their business were in fact employed by these shell companies. Lemay would also have engaged in criminal shenanigans to evade personal income tax. Now the two men face federal charges for their alleged crimes. “

IRS-CI Acting Special Agent Fattorusso said: “Mr. Lemay and Mr. Lingat are today accused of participating in a long-standing conspiracy to hide millions of dollars in payroll from the IRS. It would have cost the US taxpayer millions of dollars in lost tax revenue. As it is claimed, these men, along with others, have gone to extraordinary lengths to hide the money through a series of completely bogus companies. Today’s indictment, as well as the just announced guilty pleas of Mr. Haim and Mr. Fadida for their own roles in this scheme, demonstrate that the criminal investigation of the IRS will continually strive to ensure that honest taxpayers are protected from these types of criminal abuse.

According to the allegations in the indictment unsealed today and the criminal complaint previously filed against LINGAT (where LEMAY is identified as CC-1):[1]

From 2010 or around 2010 to or around December 2016, LEMAY, LINGAT and other co-conspirators carried out a scheme to defraud the US government from payroll and income taxes owed and owed to the IRS by the company 1 and affiliates. As part of the criminal scheme, LEMAY, LINGAT and their co-conspirators created fictitious companies, nominally owned by close associates or family members of LEMAY or other persons from the company 1; assigned (on paper only) foremen and movers working for company 1 to shell companies; and fraudulently caused the bogus companies to be believed to be independent contractors, including creating bogus invoices whereby the bogus companies allegedly bill Company 1 for the work. Because the conspirators fraudulently made it appear that the work was being performed by independent contractors, Company-1 was able to deduct the cost of the labor as an expense on its tax returns, without withholding or paying any payroll taxes to the company. IRS. Thanks to the criminal scheme, Company 1 and its affiliates avoided more than approximately $ 7.8 million in payroll taxes, including FICA and Medicare contributions, during the period billed.

LEMAY is also accused of evading personal income tax by earning substantial personal income through an entity called GM3 Enterprises Inc (“GM3”); fraudulently deduct substantial personal expenses paid through GM3 as business expenses on GM3’s corporate income tax returns; and significantly underreporting his true income and resulting tax obligations on his personal income tax returns, which LEMAY had prepared and filed with the IRS.

LEMAY, 61, of Delray Beach, Fla., And LINGAT, 61, of Jersey City, New Jersey, are charged with one count of conspiracy to defraud the IRS, carrying a maximum sentence of five years of jail. LEMAY is also charged with two counts of tax evasion for the 2014 and 2015 tax years, each also carrying a maximum penalty of five years in person.

The charges contained in the indictment are only charges, and the accused are presumed innocent until proven guilty.

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The guilty pleas of SALMAN RAMI HAIM, former president of Company-1, and NISSIM FADIDA, current president of Company-1, were also announced today. As part of their guilty pleas, both HAIM and FADIDA admitted participating in the tax evasion plot while employed at Company-1.

HAIM, 46, of Jersey City, New Jersey, pleaded guilty on May 9, 2019 before U.S. investigating magistrate Ona T. Wang to one count of conspiracy not to collect or pay payroll taxes between 2001 and 2016, in violation of 18 USC § 371, punishable by up to five years in prison; one count of tax evasion for the 2009 to 2016 tax years, in violation of 26 USC § 7201, which carries a maximum penalty of five years in prison; and one count of conspiracy to produce false identification documents, in violation of 18 USC § 1028, punishable by up to 15 years in prison.

FADIDA, 45, of East Brunswick, New Jersey, pleaded guilty on October 15, 2021, before U.S. District Judge Ronnie Abrams to one count of conspiracy to defraud the IRS between 2005 and December 2016, in violation of 18 USC § 371, which carries a maximum penalty of five years in prison; and one count of tax evasion for the 2010 to 2013 tax years, in violation of 26 USC § 7201, which carries a maximum penalty of five years in prison.

The potential maximum sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any convictions of the defendants will be determined by the judge.

Mr. Williams praised the exceptional investigative work of the IRS-CI.

This matter is being handled by the Office’s Complex Fraud and Cybercrime Unit. US Deputy Prosecutors Jilan Kamal, Katherine Reilly and Olga I. Zverovich are in charge of the prosecution.