Source: United States Department of Justice Criminal Division

To commemorate the 2025 National Crime Victims’ Rights Week, the Department of Justice reaffirms its steadfast commitment to compensate crime victims with federally forfeited assets. The Justice Department’s Asset Forfeiture Program has surpassed $12 billion in compensation to crime victims.

In fiscal year 2024 and the beginning of fiscal year 2025 alone, more than $735.3 million has been returned to victims of human trafficking; romance, investment, and healthcare fraud; business email compromise and government imposter schemes; drug diversion; and cryptocurrency-related thefts and frauds.

“This extraordinary milestone demonstrates the effectiveness of the Asset Forfeiture Program in taking the profit out of crime and compensating victims,” said Matthew R. Galeotti, Head of the Justice Department’s Criminal Division. “While the Criminal Division is deeply proud of these efforts, we recognize that crime victims often lose much more than money. We hope that victims, from exploited children to older Americans targeted by sophisticated criminal schemes, can move forward in their recovery through this compensation. This milestone was made possible by the Justice Department’s Money Laundering and Asset Recovery Section, which manages the Asset Forfeiture Program, U.S. Attorneys’ Offices across the country, and the many federal, state, local, and tribal law enforcement agencies that have dedicated their time and resources to these investigations.”  

Recent cases in which victims were compensated for their losses with forfeited assets in 2024 or 2025 include:

$4.3 Billion to Victims of Bernie Madoff

United States v. Bernard L. Madoff (Southern District of New York)

In December 2024, the Justice Department announced that the Madoff Victim Fund (MVF) would make its 10th and final distribution of over $131.4 million to victims of the Bernard L. Madoff fraud scheme. These funds were forfeited by the U.S. government in connection with the Bernard L. Madoff Investment Securities LLC (BLMIS) fraud scheme. Through its 10 distributions, MVF paid over $4.3 billion from forfeited funds to 40,930 victims in 127 countries for losses they suffered from the collapse of BLMIS, bringing recovery for victims to nearly 94% of their fraud loss. According to court documents and information presented in related proceedings, for decades, Madoff used his position as chairman of Bernard L. Madoff Investment Securities LLC, the investment advisory business he founded in 1960, to steal billions from his clients. On March 12, 2009, Madoff pleaded guilty to 11 federal felonies, admitting that he had turned his wealth management business into the world’s largest Ponzi scheme, benefitting himself, his family, and select members of his inner circle.

$420 Million to Victims of Fraud Schemes Facilitated by Western Union

United States v. The Western Union Company (Middle District of Pennsylvania)

In 2017, Western Union entered into a deferred prosecution agreement (DPA) with the United States. Pursuant to the DPA, Western Union acknowledged responsibility for its criminal conduct, which included violations of the Bank Secrecy Act and aiding and abetting wire fraud.  Western Union agreed to forfeit $586 million, which has been made available to compensate victims of the international consumer fraud scheme through the remission process. Western Union simultaneously resolved a parallel civil investigation with the Federal Trade Commission. To date, the Criminal Division has disbursed more than $420 million to approximately 175,000 victims.

$8 Million Returned to Victims of Email Business Compromise Scams

United States v. Olalekan Jacob Ponle (Northern District of Illinois)

Olalekan Jacob Ponle worked with co-schemers to engage in numerous business email compromise schemes. The co-schemers used phishing links to gain unauthorized access to email accounts and then created false instructions directing employees of the victim companies to wire money to bank accounts opened by money mules at Ponle’s direction. After unwitting employees wired money, in some cases millions of dollars, to the bank accounts, Ponle instructed the money mules to convert the proceeds to Bitcoin and send them to him. As a result of Ponle’s scheme, victim companies suffered more than $8.03 million in actual losses. The government seized the Bitcoin, obtained a final order of forfeiture, liquidated the cryptocurrency, and used the proceeds to compensate the victims of Ponle’s fraud.

$5.6 Million to the Small Business Administration

United States v. Aydin Kalantarov, et al. (Northern District of Ohio)

According to court documents, from May 2020 through October 2020, Aydin Kalantarov, along with his two brothers, Zaur Kalantarli and Ali Kalantarli, conspired to defraud the U.S. Small Business Association (SBA) of nearly $7 million in Economic Injury Disaster Loans (EIDL). As part of the scheme the brothers created 70 fictious Ohio corporations with agriculture sounding names. Once the fictitious corporations were created, the brothers submitted fraudulent EIDL loan applications to the SBA claiming that their business was adversely affected by the pandemic. The SBA funded 47 of the applications for a total of approximately $7 million. $5.6 million in forfeited funds was transferred to the clerk of the court for payment to the SBA.

$2.28 Million Returned to Victims of Two Business Email Compromise Schemes

United States v. Contents of TD Bank Account, Account Ending 7684, Held in the Name of O’Shane K. Malcolm, et al. (District of Connecticut)

United States v. Contents of Truist Bank Account Ending 5792, Held in The Name of Quest Freight LLC (District of Connecticut)

In the first scam, criminal actors compromised an email account associated with a member of the management team of a city’s Board of Education.  In June 2023, these actors created a fake email account that mimicked the email of a bus company that held a contract with the Board of Education for bussing. Using the fake bus company email address, the criminal actors then were able to change the bus company’s payment information from the real bus company to an account held by the criminal actors, and the city sent approximately $5.9 million dollars to the account.  The government successfully seized and forfeited approximately $1,187,691 of the stolen money, which was returned to the city through remission.

The second forfeiture action involved a healthcare company that was a victim of a business email compromise (BEC) attack.  In April 2023, the company’s yearly medical malpractice insurance payment was set to be paid.  Shortly before the due date, the company received a fraudulent email, purportedly from its malpractice insurance company, with new wire instructions.  The company sent approximately $1,652,254 via a wire transfer using the newly provided instructions. The government successfully seized and forfeited approximately $1,100,694 remaining in the account, which was returned to the healthcare company through remissions.

$328,500 to an Elderly Victim of a Computer Support Scam

United States v. Discovery Bank Account Ending in 2237 (District of Connecticut)

According to court documents, in February 2024, an elderly woman who was tricked by a computer support scheme that mimicked Microsoft customer support transferred approximately $550,000 to the scammers in two wire transfers. Within two days of the transfers, the victim and a family member reported the incident to a local police department, who then partnered with Homeland Security Investigations (HSI) to investigate the crime. Fortunately, one of the wire transfers, in the amount of $221,000, was reversed by the bank and returned to the victim. HSI traced the remaining money, totaling approximately $328,573, and seized it. The U.S. Attorney’s Office then filed a civil asset forfeiture action to forfeit the money to the government, and the U.S. Attorney’s Office and HSI then worked with the Department of Justice’s Money Laundering and Asset Recovery Section to return the money to the victim.

$6.4 Million to the Internal Revenue Service

United States v. Michael Little (Middle District of Florida)

From 2019 to 2021, Michael Little filed a series of false tax returns claiming massive, bogus fuel tax credits. He filed the false returns in his own name and in the names of co-conspirators and identity theft victims. As a result of this scheme, Little and his co-conspirators obtained at least $12.3 million in fraudulent tax refunds and attempted to obtain at least $27 million more. Little and his co-conspirators also conspired to launder their ill-gotten gains and used significant portions of the fraudulent tax refunds to purchase real estate and other assets.  Over $6.4 million in forfeited funds were transferred to the clerk of court for payment to the IRS.

$52,000 to a Survivor of Human Trafficking

United States v. Thuy Tien Luong (Western District of North Carolina)

Thuy Tien Luong was convicted of forced labor and ordered to serve 15 years in prison for compelling the labor of one of her nail technicians at a salon she owned and operated. From October 2016 to June 2018, Luong forced the survivor’s labor by, among other things, physically assaulting the survivor, threatening to ruin the survivor’s reputation with her family, and falsely claiming that the survivor owed Luong a fictitious debt. In addition to resulting in the return of funds seized from Luong to the Clerk of Court to pay the survivor, the case also resulted in the return to the survivor of a seized bracelet that Luong had held as “payment” towards the survivor’s fictitious debt.

$6.3 Million Returned to Estate Victims of an Embezzlement Scheme

United States v. Richard J. Sherwood, et al. (Northern District of New York)

Starting in 2006, Richard J. Sherwood and Thomas K. Lagan provided estate planning and related legal services to Capital Region philanthropists Warren and Pauline Bruggeman, and to Pauline’s sister, Anne Urban, all of Niskayuna, New York.  They were advising the Bruggemans when, in 2006, the Bruggemans signed wills directing that all their assets go to churches, civic organizations, a local hospital, and a local university scholarship fund, aside from bequests to Urban and Julia Rentz, Pauline’s sisters.

Warren Bruggeman died in April 2009, and Pauline died in August 2011. In each pleading guilty, Sherwood and Lagan admitted that they conspired to steal, and did steal, millions of dollars from Pauline Bruggeman’s estate as well as from the estate of Urban, who died in 2013. The co-conspirators admitted that they stole $11,831,563 and Sherwood also admitted that he transferred to himself the Bruggeman family camp located on Galway Lake, in Saratoga County.

For additional information about the Department of Justice’s victim compensation program, please visit: Criminal Division | Victims.

Source: United States Department of Justice 2

To commemorate the 2025 National Crime Victims’ Rights Week, the Department of Justice reaffirms its steadfast commitment to compensate crime victims with federally forfeited assets. The Justice Department’s Asset Forfeiture Program has surpassed $12 billion in compensation to crime victims.

In fiscal year 2024 and the beginning of fiscal year 2025 alone, more than $735.3 million has been returned to victims of human trafficking; romance, investment, and healthcare fraud; business email compromise and government imposter schemes; drug diversion; and cryptocurrency-related thefts and frauds.

“This extraordinary milestone demonstrates the effectiveness of the Asset Forfeiture Program in taking the profit out of crime and compensating victims,” said Matthew R. Galeotti, Head of the Justice Department’s Criminal Division. “While the Criminal Division is deeply proud of these efforts, we recognize that crime victims often lose much more than money. We hope that victims, from exploited children to older Americans targeted by sophisticated criminal schemes, can move forward in their recovery through this compensation. This milestone was made possible by the Justice Department’s Money Laundering and Asset Recovery Section, which manages the Asset Forfeiture Program, U.S. Attorneys’ Offices across the country, and the many federal, state, local, and tribal law enforcement agencies that have dedicated their time and resources to these investigations.”  

Recent cases in which victims were compensated for their losses with forfeited assets in 2024 or 2025 include:

$4.3 Billion to Victims of Bernie Madoff

United States v. Bernard L. Madoff (Southern District of New York)

In December 2024, the Justice Department announced that the Madoff Victim Fund (MVF) would make its 10th and final distribution of over $131.4 million to victims of the Bernard L. Madoff fraud scheme. These funds were forfeited by the U.S. government in connection with the Bernard L. Madoff Investment Securities LLC (BLMIS) fraud scheme. Through its 10 distributions, MVF paid over $4.3 billion from forfeited funds to 40,930 victims in 127 countries for losses they suffered from the collapse of BLMIS, bringing recovery for victims to nearly 94% of their fraud loss. According to court documents and information presented in related proceedings, for decades, Madoff used his position as chairman of Bernard L. Madoff Investment Securities LLC, the investment advisory business he founded in 1960, to steal billions from his clients. On March 12, 2009, Madoff pleaded guilty to 11 federal felonies, admitting that he had turned his wealth management business into the world’s largest Ponzi scheme, benefitting himself, his family, and select members of his inner circle.

$420 Million to Victims of Fraud Schemes Facilitated by Western Union

United States v. The Western Union Company (Middle District of Pennsylvania)

In 2017, Western Union entered into a deferred prosecution agreement (DPA) with the United States. Pursuant to the DPA, Western Union acknowledged responsibility for its criminal conduct, which included violations of the Bank Secrecy Act and aiding and abetting wire fraud.  Western Union agreed to forfeit $586 million, which has been made available to compensate victims of the international consumer fraud scheme through the remission process. Western Union simultaneously resolved a parallel civil investigation with the Federal Trade Commission. To date, the Criminal Division has disbursed more than $420 million to approximately 175,000 victims.

$8 Million Returned to Victims of Email Business Compromise Scams

United States v. Olalekan Jacob Ponle (Northern District of Illinois)

Olalekan Jacob Ponle worked with co-schemers to engage in numerous business email compromise schemes. The co-schemers used phishing links to gain unauthorized access to email accounts and then created false instructions directing employees of the victim companies to wire money to bank accounts opened by money mules at Ponle’s direction. After unwitting employees wired money, in some cases millions of dollars, to the bank accounts, Ponle instructed the money mules to convert the proceeds to Bitcoin and send them to him. As a result of Ponle’s scheme, victim companies suffered more than $8.03 million in actual losses. The government seized the Bitcoin, obtained a final order of forfeiture, liquidated the cryptocurrency, and used the proceeds to compensate the victims of Ponle’s fraud.

$5.6 Million to the Small Business Administration

United States v. Aydin Kalantarov, et al. (Northern District of Ohio)

According to court documents, from May 2020 through October 2020, Aydin Kalantarov, along with his two brothers, Zaur Kalantarli and Ali Kalantarli, conspired to defraud the U.S. Small Business Association (SBA) of nearly $7 million in Economic Injury Disaster Loans (EIDL). As part of the scheme the brothers created 70 fictious Ohio corporations with agriculture sounding names. Once the fictitious corporations were created, the brothers submitted fraudulent EIDL loan applications to the SBA claiming that their business was adversely affected by the pandemic. The SBA funded 47 of the applications for a total of approximately $7 million. $5.6 million in forfeited funds was transferred to the clerk of the court for payment to the SBA.

$2.28 Million Returned to Victims of Two Business Email Compromise Schemes

United States v. Contents of TD Bank Account, Account Ending 7684, Held in the Name of O’Shane K. Malcolm, et al. (District of Connecticut)

United States v. Contents of Truist Bank Account Ending 5792, Held in The Name of Quest Freight LLC (District of Connecticut)

In the first scam, criminal actors compromised an email account associated with a member of the management team of a city’s Board of Education.  In June 2023, these actors created a fake email account that mimicked the email of a bus company that held a contract with the Board of Education for bussing. Using the fake bus company email address, the criminal actors then were able to change the bus company’s payment information from the real bus company to an account held by the criminal actors, and the city sent approximately $5.9 million dollars to the account.  The government successfully seized and forfeited approximately $1,187,691 of the stolen money, which was returned to the city through remission.

The second forfeiture action involved a healthcare company that was a victim of a business email compromise (BEC) attack.  In April 2023, the company’s yearly medical malpractice insurance payment was set to be paid.  Shortly before the due date, the company received a fraudulent email, purportedly from its malpractice insurance company, with new wire instructions.  The company sent approximately $1,652,254 via a wire transfer using the newly provided instructions. The government successfully seized and forfeited approximately $1,100,694 remaining in the account, which was returned to the healthcare company through remissions.

$328,500 to an Elderly Victim of a Computer Support Scam

United States v. Discovery Bank Account Ending in 2237 (District of Connecticut)

According to court documents, in February 2024, an elderly woman who was tricked by a computer support scheme that mimicked Microsoft customer support transferred approximately $550,000 to the scammers in two wire transfers. Within two days of the transfers, the victim and a family member reported the incident to a local police department, who then partnered with Homeland Security Investigations (HSI) to investigate the crime. Fortunately, one of the wire transfers, in the amount of $221,000, was reversed by the bank and returned to the victim. HSI traced the remaining money, totaling approximately $328,573, and seized it. The U.S. Attorney’s Office then filed a civil asset forfeiture action to forfeit the money to the government, and the U.S. Attorney’s Office and HSI then worked with the Department of Justice’s Money Laundering and Asset Recovery Section to return the money to the victim.

$6.4 Million to the Internal Revenue Service

United States v. Michael Little (Middle District of Florida)

From 2019 to 2021, Michael Little filed a series of false tax returns claiming massive, bogus fuel tax credits. He filed the false returns in his own name and in the names of co-conspirators and identity theft victims. As a result of this scheme, Little and his co-conspirators obtained at least $12.3 million in fraudulent tax refunds and attempted to obtain at least $27 million more. Little and his co-conspirators also conspired to launder their ill-gotten gains and used significant portions of the fraudulent tax refunds to purchase real estate and other assets.  Over $6.4 million in forfeited funds were transferred to the clerk of court for payment to the IRS.

$52,000 to a Survivor of Human Trafficking

United States v. Thuy Tien Luong (Western District of North Carolina)

Thuy Tien Luong was convicted of forced labor and ordered to serve 15 years in prison for compelling the labor of one of her nail technicians at a salon she owned and operated. From October 2016 to June 2018, Luong forced the survivor’s labor by, among other things, physically assaulting the survivor, threatening to ruin the survivor’s reputation with her family, and falsely claiming that the survivor owed Luong a fictitious debt. In addition to resulting in the return of funds seized from Luong to the Clerk of Court to pay the survivor, the case also resulted in the return to the survivor of a seized bracelet that Luong had held as “payment” towards the survivor’s fictitious debt.

$6.3 Million Returned to Estate Victims of an Embezzlement Scheme

United States v. Richard J. Sherwood, et al. (Northern District of New York)

Starting in 2006, Richard J. Sherwood and Thomas K. Lagan provided estate planning and related legal services to Capital Region philanthropists Warren and Pauline Bruggeman, and to Pauline’s sister, Anne Urban, all of Niskayuna, New York.  They were advising the Bruggemans when, in 2006, the Bruggemans signed wills directing that all their assets go to churches, civic organizations, a local hospital, and a local university scholarship fund, aside from bequests to Urban and Julia Rentz, Pauline’s sisters.

Warren Bruggeman died in April 2009, and Pauline died in August 2011. In each pleading guilty, Sherwood and Lagan admitted that they conspired to steal, and did steal, millions of dollars from Pauline Bruggeman’s estate as well as from the estate of Urban, who died in 2013. The co-conspirators admitted that they stole $11,831,563 and Sherwood also admitted that he transferred to himself the Bruggeman family camp located on Galway Lake, in Saratoga County.

For additional information about the Department of Justice’s victim compensation program, please visit: Criminal Division | Victims.

Source: United States Department of Justice

A Georgia man was sentenced today to 78 months in prison for his involvement in a conspiracy to launder millions of dollars in drug proceeds on behalf of foreign drug trafficking organizations, including the Sinaloa cartel and Cartel de Jalisco Nueva Generacion (the Jalisco cartel). On Dec. 4, 2024, his co-conspirator was sentenced to 90 months in prison for his role in the money laundering scheme.

According to court documents, Li Pei Tan, 47, of Buford, Georgia, and Chaojie Chen, 41, a Chinese national who resided in Chicago, worked for an organization that laundered millions of dollars in proceeds related to the importation and distribution of illegal drugs into the United States, primarily through Mexico. Tan, Chen, and their co-conspirators traveled throughout the United States to collect proceeds of fentanyl and cocaine trafficking, among other drugs. The defendants communicated and coordinated with co-conspirators in China and other foreign countries to arrange the laundering of these proceeds through financial transactions that were designed to conceal the illicit source of the drug money, including through a sophisticated trade-based money laundering scheme involving purchasing bulk electronics in the United States and shipping them to co-conspirators in China.

On multiple occasions prior to Chen’s May 2024 arrest, law enforcement seized hundreds of thousands of dollars in bulk cash drug proceeds from Chen at locations across the United States. Tan was intercepted by law enforcement in South Carolina while attempting to transport over $197,000 in drug proceeds.

According to the Drug Enforcement Administration’s (DEA’s) National Drug Threat Assessment, the Sinaloa and Jalisco cartels are at the heart of the fentanyl crisis in the United States.

Matthew R. Galeotti, Head of the Justice Department’s Criminal Division; U.S. Attorney Erik S. Siebert for the Eastern District of Virginia; and Special Agent in Charge Louis A. D’Ambrosio of the Drug Enforcement Administration’s (DEA) Special Operations Division made the announcement.

The DEA’s Special Operations Division, Bilateral Investigations Unit investigated the case, with assistance from the DEA’s Office of Special Intelligence, Document and Media Exploitation Unit and the DEA’s offices in Chicago, Atlanta, Charlotte, North Carolina, and Charleston, South Carolina.

This case is part of Operation Take Back America, a nationwide initiative that marshals the full resources of the Department of Justice to repel the invasion of illegal immigration, achieve the total elimination of cartels and transnational criminal organizations, and protect our communities from the perpetrators of violent crime. Operation Take Back America streamlines efforts and resources from the Department’s Organized Crime Drug Enforcement Task Forces (OCDETFs) and Project Safe Neighborhood (PSN).

Trial Attorney Mary K. Daly of the Criminal Division’s Money Laundering and Asset Recovery Section and Assistant U.S. Attorney Edgardo J. Rodriguez of the United States Attorney’s Office for the Eastern District of Virginia prosecuted the case.

This effort is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) operation.  OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States, using a prosecutor-led, intelligence-driven, multi-agency approach.  Additional information about the OCDETF Program can be found at www.justice.gov/OCDETF.

Source: United States Department of Justice

A federal grand jury in the Eastern District of Missouri returned an indictment on Wednesday charging Travis Santel Jones, 21, of St. Louis, Missouri, with one count of murder in aid of racketeering, RICO conspiracy, using a firearm during a crime of violence, and causing death with a firearm, all related to Jones’s alleged part in the Cochran Crips, a violent street gang based in St. Louis. Two victims were gunned down in the street and one victim was killed at his own home.

“There is no place in our communities for groups that terrorize their neighbors,” said Matthew R. Galeotti, Head of the Justice Department’s Criminal Division. “This indictment alleges violent criminal acts and the tragic loss of three lives, all at the hands of a dangerous gang member. The Department of Justice’s Criminal Division will continue to pursue justice for these victims and for the people of St. Louis.”

“The alleged activity here is exactly the type of case that the Violent Crime Initiative was designed to tackle — complex criminal conspiracies involving drugs and years of violence,” said U.S. Attorney Sayler A. Fleming for the Eastern District of Missouri. “There are severe federal consequences for anyone who is tempted to kill and maim to peddle poison.”

“For years, FBI St. Louis has been investigating violent crimes and drug trafficking by Cochran Crips gang members. In 2020, our office surged resources to assist the St. Louis Metropolitan Police Department after two innocent Saint Louis University students were gunned down simply because their vehicle was misidentified by the gang,” said Special Agent in Charge Ashley Johnson of the FBI St. Louis Field Office. “The FBI and our law enforcement partners will not stop until we bring all those involved in the murders to justice.”

“Violence has no place in our community, and this indictment sends a clear message: we will always be a voice for victims, and we will not stop pursuing justice until there is accountability,” said St. Louis Metropolitan Police Department Chief Robert J. Tracy. “I am proud of the dedication by our investigators on this case, and we will continue to work with our federal law enforcement partners to keep our neighborhoods safe and take dangerous criminals off our streets.”

According to court documents, Jones conspired with other Cochran Crips members to commit multiple acts of murder and multiple drug trafficking offenses. Specifically, it is alleged in July 2020, Jones and other members were driving the streets of St. Louis, armed with multiple firearms, looking for “get backs” (retaliation) against a rival gang. While searching for rival gang members, Jones and others allegedly killed two innocent people whom they mistakenly believed to be rivals. After allegedly shooting and killing the victims, Jones and other Cochran Crips allegedly sped away, fleeing the scene and endangering other motorists on the road. Just a day after the murders, it is alleged that Cochran Crips gang members glorified the murders in a rap song.

In 2022, Jones allegedly murdered another Cochran Crips member when the gang believed that the victim had disrespected a fellow gang member. The gang members are alleged to have obtained a car, armed themselves with multiple firearms, drove to the victim’s home, and murdered him.

If convicted of murder in aid of racketeering, Jones faces a mandatory minimum penalty of life in prison or the death penalty. All other charges carry a maximum penalty of life in prison.  

The FBI and the St. Louis Metropolitan Police Department are investigating the case.

Trial Attorneys Jared A. Hernandez and Matthew Mattis of the Criminal Division’s Violent Crime and Racketeering Section and Assistant U.S. Attorney Nino Przulj for the Eastern District of Missouri are prosecuting the case.

This case is part of the Criminal Division’s Violent Crime Initiative in St. Louis conducted in partnership with the U.S. Attorney’s Office in the Eastern District of Missouri and local, state, and federal law enforcement. The joint effort addresses violent crime by employing, where appropriate, federal laws to prosecute gang members and their associates in St. Louis.

This case is also part of an Organized Crime Drug Enforcement Task Forces (OCDETF) operation. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at www.justice.gov/OCDETF.

An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Source: United States Department of Justice Criminal Division

A Florida man was sentenced today to 18 months in prison, two years of supervised release, and ordered to pay $4,381,265.76 in restitution to the United States for willfully failing to pay over employment taxes and willfully failing to file individual income tax returns.

According to court documents and statements made in court, Paul Walczak controlled a network of interconnected health care companies operating under various names, including Palm Health Partners. Through another of his entities, Palm Health Partners Employment Services (PHPES), Walczak employed over 600 people and paid over $24 million annually in payroll. As such, Walczak was required to withhold Social Security, Medicare, and federal income taxes from his employees’ paychecks and to pay those monies over to the IRS each quarter, and to pay the companies’ portion of Social Security and Medicare taxes.

For more than a decade, Walczak was not compliant with his tax obligations and instead used the withheld taxes to enrich himself. In 2011, Walczak did not pay two quarters of withheld taxes to the IRS. In 2012, the IRS began collection efforts, including by sending him notices about his unpaid taxes, and by meeting with Walczak to help bring him into compliance. When that effort was unsuccessful, the IRS assessed the outstanding taxes against him personally. After that was imposed, Walczak paid the assessments in October 2014. Walczak’s compliance did not last long, however. By the end of the following year, Walczak was again withholding taxes from his employees’ paychecks and keeping the money.

From 2016 through 2019, Walczak withheld $7,432,223.80 of taxes from his employees’ paychecks, but did not pay those taxes over to the IRS. While Walczak was withholding taxes from the pay of his employees under the pretext of paying these funds to the IRS, he used over $1 million from his businesses’ bank accounts to purchase a yacht, transferred hundreds of thousands of dollars to his personal bank accounts, and used the business accounts for personal purchases at retailers such as Bergdorf Goodman, Cartier, and Saks. During this same time, he also did not pay $3,480,111 of his business’s portion of his employees’ Social Security and Medicare taxes.

By 2019, the IRS had assessed millions of dollars in civil penalties against Walczak. Beginning with the 2018 tax year, Walczak also stopped filing personal income tax returns despite that he was still receiving income including a $360,000 salary from PHPES and $450,000 in transfers from his business bank accounts.

Moreover, in 2019, Walczak created a new business, NextEra. Walczak used a family member as the 99% nominal owner of NextEra, but Walczak had ultimate control of the finances and operations of NextEra. Through NextEra, Walczak transferred in 2020 just under $200,000 to a bank account titled in a family member’s name, over $250,000 to a bank account in his wife’s name, and over $800,000 in payments directly to third parties for Walczak’s personal expenses, including clothing stores, department stores, and fishing retailers.

In total, Walczak caused a tax loss to the IRS of $10,912,334.80

Acting Deputy Assistant Attorney Karen E. Kelly of the Justice Department’s Tax Division and Special Agent in Charge Emmanuel Gomez of IRS Criminal Investigation (IRS-CI) Miami Field Office made the announcement.

IRS-CI investigated the case.

Trial Attorneys Brian Flanagan, Andrew Ascencio, and Ashley Stein of the Justice Department’s Tax Division prosecuted the case.