BROOKLYN, NY — An indictment was unsealed on December 6, 2023, in federal court docket in Brooklyn charging Alexander Figliolia, Jr., and Kenneth Sutherland, the homeowners of Liberty Water & Sewer (Liberty Water), a Brooklyn-based plumbing firm which they function as a partnership, with tax evasion and conspiracy to defraud the USA. Figliolia, Jr., and Sutherland had been arrested and their preliminary appearances are scheduled earlier than United States Justice of the Peace Choose James R. Cho.
Breon Peace, United States Lawyer for the Jap District of New York, Thomas Fattorusso, Particular Agent-in-Cost, Inside Income Service Felony Investigation, New York (IRS-CI), James Smith, Assistant Director-in-Cost, Federal Bureau of Investigation, New York Subject Workplace (FBI), and Jocelyn E. Strauber, Commissioner, New York Metropolis Division of Investigation (DOI), introduced the arrests and expenses.
Greed and Abuse of Belief
“Enterprise homeowners like everybody else have an obligation to pay their justifiable share of taxes,” acknowledged United States Lawyer Peace. “As alleged, the defendants made hundreds of thousands of {dollars} repairing water and sewer strains for New York Metropolis residents, however as a substitute of dutifully paying the taxes they owed, they improperly labeled greater than $10 million of non-public bills as enterprise bills. Their greed drained the federal government’s coffers of almost $4 million in tax income.”
“Figliolia and Sutherland had been residing the lavish life whereas allegedly failing to report greater than ten million {dollars} in revenue. The yachts, jewellery and household journeys had been all paid for with cash owed to the federal authorities. At present’s indictment is a message to all those that select to evade taxes, someday your extravagant life-style on the taxpayer dime will come to an finish, and you may be prosecuted to your actions,” acknowledged IRS-CI Particular Agent-in-Cost Thomas Fattorusso.
“The defendants, as charged, evaded taxes on hundreds of thousands of {dollars} of revenue from the enterprise they carried out in New York Metropolis, by misclassifying lavish private bills as enterprise bills to scale back their tax burden. I thank our federal legislation enforcement companions for his or her dedication to carry corrupt contractors on this Metropolis accountable,” acknowledged DOI Commissioner Strauber.
“The alleged greed and abuse of belief listed below are unconscionable. Pocketing funds to assist an extravagant life-style is an afront to hardworking taxpayers who trusted these males to do sincere work,” stated James Smith, Assistant Director in Cost of the FBI New York Subject Workplace. “The FBI is dedicated to working with our legislation enforcement companions to analyze allegations of serious monetary crime and holding the individuals behind them accountable for his or her actions.”
Evading Nearly $4M in Taxes
As alleged within the indictment and different court docket filings, between January 2017 and June 2020, the defendants evaded private revenue taxes by issuing checks and wiring cash from Liberty Water’s checking account to pay for private bills. The defendants labeled these funds of their private bills as enterprise bills of Liberty Water, thereby lowering Liberty Water’s earnings and lowering the defendants’ private revenue tax burdens.
For instance, Figliolia, Jr., and Sutherland labeled greater than $1.75 million of non-public bank card bills, together with house renovations, a household journey to Disney World, jewellery, clothes and veterinary bills, as enterprise bills. As one other instance, Figliolia, Jr., and Sutherland obtained loans of greater than $2.8 million on private life insurance coverage insurance policies, and repaid the loans utilizing Liberty Water funds, permitting them to siphon that cash out of the enterprise with out paying taxes. As nonetheless one other instance, Figliolia, Jr., issued greater than $4 million in checks from Liberty Water’s checking account to a legislation agency for the cost of non-public bills, together with the acquisition of a number of properties and a yacht, however labeled them as enterprise bills of Liberty Water.
In complete, Figliolia, Jr., and Sutherland deliberately diverted roughly $10,225,213 from Liberty Water between tax years 2017 and 2019, ensuing within the evasion of roughly $3,933,046 in federal taxes.
The costs within the indictment are allegations, and the defendants are presumed harmless until and till confirmed responsible. If convicted, the defendants every face a most sentence of 5 years’ imprisonment on every rely.
The federal government’s case is being dealt with by the Workplace’s Public Integrity Part. The federal government’s case is being prosecuted by Assistant United States Attorneys Philip Pilmar and Dana Rehnquist.
For extra data or to obtain a duplicate of the indictment, go to the website online of the United States Lawyer’s Workplace for the Jap District of New York.