United States Attorney Anne M. Tompkins Western District Of North Carolina
CHARLOTTE, N.C. - James William Staz has pleaded guilty to federal charges for defrauding more than $11 million from clients of the third-party payroll company he jointly operated with his father, announced Anne M. Tompkins, U.S. Attorney for the Western District of North Carolina. James Staz, 44, of Iron Station, N.C. appeared before U.S. Magistrate Judge David S. Keesler today and pleaded guilty to wire fraud, transactional money laundering and tax evasion. James Staz’s father, William James Staz, 72, of Huntersville, N.C., pleaded guilty in January 2015 to wire fraud and tax evasion charges.
U.S. Attorney Tompkins is joined in making today’s announcement by John A. Strong, Special Agent in Charge of the Federal Bureau of Investigation (FBI), Charlotte Division and Thomas J. Holloman III, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation Division (IRS-CI).
According to court documents and today’s plea hearing, William and James Staz operated the third-party payroll company, “Employee Services.Net, Inc." (ESN) and provided various services to client companies, including processing payroll, collecting and paying employment taxes, and preparing and filing employment tax forms. At its height, ESN had approximately 500 client companies nationwide. Court records show that James Staz was ESN’s vice president and later the company’s president. William Staz was a company shareholder and, through 2008, managed ESN’s day-to-day operations. According to court documents, ESN had access to the clients companies’ bank accounts and directly drafted the funds needed to cover expenses associated with the services it provided.
According to court records, from 2008 to March 2014, the two men defrauded at least 113 ESN clients of approximately $11 million dollars intended for payroll and employment tax payments and used it to support their personal lifestyles. According to the charging documents, during that time period, James Staz stole at least $3.7 million in client funds and directed the money to his personal bank account. In order to conceal his embezzlement, James Staz made false entries into ESN’s accounting system to make it appear as though the funds were used for legitimate client expenses. According to court records, James Staz used the money to pay for alcohol, strip club entertainment, jewelry, a Mercedes Benz and a luxury home. Court records also show that over the course of the scheme, William Staz drew a salary from ESN as high as $200,000, even for the time period he was serving a nine-month federal prison sentence.
James Staz has been detained since his arrest in October 2014. William Staz has been released on bond pending sentencing. They each face a maximum of 20 years in prison and a $250,000 fine for the wire fraud charge and five years in prison and a $100,000 fine for the tax evasion charge. James Staz also faces a maximum of 20 years in prison and a $500,000 fine or twice the amount of the criminally derived proceeds, whichever is greater, for the money laundering charge. As part of the plea agreement, both defendants have agreed to pay restitution, the amount of which will be determined by the Court at sentencing. A sentencing date for the defendants has not been set yet.
The investigation for the case was handled by the FBI and IRS-CI. The prosecution of the case is being handled by Assistant U.S. Attorney Kelli H. Ferry of the U.S. Attorney’s Office, in Charlotte.
Source: U.S. Department of Justice, Office of the United States Attorneys
