A three-count indictment was filed charging the former director of the Cleveland Job Corps Center with withholding more than $872,000 in federal taxes from employees but never paying the money over to the Internal Revenue Service, law enforcement officials said.
Clark V. Hayes, 53, of Richfield, Ohio, was the owner of Applied Technology Systems, Inc. or ATSI, in Cleveland. The U.S. Department of Labor contracted with ATSI to operate the Cleveland and Jacksonville Job Corps Centers, according to the indictment.
“This defendant was hired to make sure struggling workers learned new job skills, but instead used it as an opportunity defraud his workers and the government," said Steven M. Dettelbach, United States Attorney for the Northern District of Ohio.
“Business owners have an inescapable obligation to withhold income taxes for employees and remit those taxes to the IRS," said Kathy Enstrom, Special Agent in Charge, IRS-Criminal Investigation, Cincinnati field office. “The failure to pay over withheld taxes is a serious offense. IRS Criminal Investigation vigorously pursues those who violate employment tax laws."
Under the terms of the agreement, ATSI staffed and maintained the centers, subject to reimbursement by the Department of Labor for their costs based on a budget. The reimbursable costs included the wages ATSI paid to the centers’ employees, including amounts to be withheld and paid over to the IRS, according to the indictment.
The Labor Department paid ATSI more than $15.5 million between from on or about July 1, 2010, through Aug. 16, 2011, according to the indictment.
For the quarter ending Sept. 30, 2010, Hayes withheld but did not pay over $138,208. For the quarter ending Dec. 31, 2010, Hayes withheld but did not pay over $483,495. For the quarter ending March 31, 2011, Hayes withheld but did not pay over $250,307, according to the indictment.
This case is being prosecuted by Assistant U.S. Attorneys Vasile Katsaros and Antoinette T. Bacon following an investigation by the Internal Revenue Service - Criminal Investigations and the Department of Labor -- Office of Inspector General.
If convicted, the defendant’s sentence will be determined by the court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violation. In all cases, the sentence will not exceed the statutory maximum and in most cases it will be less than the maximum.
An indictment is only a charge and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Source: U.S. Department of Justice, Office of the United States Attorneys
