California CEO Pleads Guilty in Employment Tax Scheme | OPA

A California man pleaded guilty yesterday to employment tax fraud.

According to court documents, Michael Todd Lucas, CEO of i3 Brands Inc., controlled a number of inventory software development businesses from 2008 through 2017, including i3 Brands Inc., Trademotion Inc. (formerly known as Trademotion LLC), Intelligentz Automotive Corporation, and Intelligentz Corporation. Lucas had significant control over the finances of these companies and had a legal duty to account for and pay employment taxes to the IRS. Lucas caused these entities to withhold taxes from employees’ paychecks, but he did not fully pay the withheld taxes to the IRS. Rather, Lucas caused the businesses to spend thousands of dollars for his personal benefit. In total, from 2008 to 2017, Lucas’ entities failed to pay over more than $4.9 million in payroll taxes, penalties, and interest.

Lucas pleaded guilty to failing to account for and pay over employment taxes. He is scheduled to be sentenced on Oct. 4, 2021, and faces a maximum penalty of five years in prison. The defendant also faces a period of supervised release, restitution, and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney Randy S. Grossman for the Southern District of California made the announcement.

IRS-Criminal Investigation is investigating the case.

Trial Attorney Charles A. O’Reilly and Assistant U.S. Attorney Stephen K. Moulton, now of the Middle District of Alabama, prosecuted the case.