Abingdon, VIRGINIA – A Carroll County business owner, who paid some of his employees in cash to avoid paying taxes to the Internal Revenue Service and later lied in a bankruptcy proceeding, was sentenced today in federal court in Abingdon, United States Attorney Rick A. Mountcastle announced.
Jones Keith Andrews, 62, of Galax, Va., was sentenced today to imprisonment for a term of 24 months and was ordered to pay the Internal Revenue Service restitution in the amount of $609,604. Andrews previously pleaded guilty without the benefit of a plea agreement to one count of conspiracy to defraud the United States by impeding, impairing, obstructing and defeating the lawful function of the Internal Revenue Service, 17 counts of failure to pay or collect tax, and one count of bankruptcy fraud.
Between 2009 and March 2015, Andrews, and others, executed a scheme in which a portion of the wages paid to employees of Andrews Farming was paid via paycheck and the remainder was paid in cash. For each quarter from 2009 through 2014, the conspirators caused IRS Forms 941 to be sent to the United States Government that falsely underreported the wages paid to employees of Andrews Farming. The Forms 941 only listed the wages paid to employees via paycheck and did not include the amounts paid via cash.
In addition, for each year from 2009 through 2014, the conspirators caused Forms W2 to be sent to the United States Government that falsely underreported the wages paid to employees of Andrews Farming. The Forms W2 listed only wages paid via paycheck and not the wages paid in cash.
The cash paid to employees was obtained by cashing of personal and company checks. Over $1 million in cash was obtained by the cashing of those checks.
In addition, Andrews knowingly made a false statement, under oath, during a bankruptcy hearing in May 2016. Andrews claimed at a May 5, 2016, bankruptcy hearing that Andrews Farming had lost approximately $1.3 million due to "embezzlement of employee, Robert Donald Morgan, III," when in fact Andrews knew that was not true and correct. Andrews knew that a significant portion of the amounts he attributed to embezzlement by Morgan were, in fact, used to pay cash wages.
Robert Donald "Donnie" Morgan previously pleaded guilty for his role in the criminal activity and was sentenced to imprisonment for a term of six months on March 29, 2016.
The investigation of the case was conducted by the Internal Revenue Service – Criminal Investigation and the United States Secret Service. The Blacksburg, Virginia, Police Department provided valuable assistance in forensically analyzing the computers seized in the case. Assistant United States Attorney Randy Ramseyer prosecuted the case for the United States.
--DOJ Western District of Virginia