Man pleads guilty to defrauding IRS

Former PaySource owner must repay $26.7M

10/30/2012

DAYTON — Robert Sacco, the former PaySource owner accused of bilking the IRS of $26.7 million, pleaded guilty to federal felony charges before his trial was scheduled to start Monday.

Sacco pleaded guilty to conspiracy to defraud the United States by impeding the Internal Revenue Service, money laundering, and tax evasion. “This is one of the highest amounts of employment tax fraud we’ve ever seen,” said Craig Casserly, spokesman for IRS office in Columbus.

Sacco defrauded the IRS by withholding money from employees’ paychecks for taxes, then keeping the money instead of paying it to the IRS, according to Carter Stewart, U.S. Attorney for the Southern District of Ohio.

Mr. Casserly said he did not know how many employees were affected.

The plea agreement includes a money judgment of $26,729,098.79, representing the amount Sacco owes to the government, and recommends a prison sentence of 78 months. No sentencing date has been set.

U.S. District Judge Michael Barrett tentatively accepted Sacco’s plea, but the court will conduct a presentencing investigation before ruling on whether to accept the terms of the plea agreement, according to Mr. Carter.

Sacco had faced trial on more than 60 federal charges.

This is the second federal conviction for Sacco, 61, who pleaded guilty in 1995 to a federal embezzlement charge.

In that case, Sacco was placed on probation for three years and ordered to pay restitution to The New York State Nurses Association, a labor union, and its insurance company. The plea agreement in that case states that he embezzled nearly $61,000.

Sacco told the Dayton Daily News in 2003 that he moved to the Dayton area in 1995.

Sacco, who lived in Huber Heights prior to moving to Orlando in 2010, was arrested by IRS and Homeland Security agents at the Orlando International Airport following his indictment in October, 2010.

Dayton-based PaySource employed 40 people. It was a co-employment company — meaning that it hired a client company’s employees, thus becoming their employer of record for tax and insurance purposes.

PaySource enabled business owners to outsource the management of human resources, employee benefits, payroll, workers’ compensation, and other strategic services.

Sacco directed co-conspirators to prepare fraudulent IRS forms claiming that the wages paid by the company and the resulting tax liabilities were significantly lower than the wages the company actually paid, according to court records.