Taking kickbacks from your subcontractors is a federal crime. Failing to pay income tax on those kickbacks is a separate federal crime.
That’s what an Alabama man learned when he was sentenced on February 17, 2016, to four years in prison.
According to a U.S. Department of Justice press release (click here to read the full press release), Victor Villalobos, 47, worked for a federal prime contractor at Fort Rucker, Alabama. In 2009, Villalobos approached one of his company’s subcontractors and solicited illegal kickbacks. Villalobos agreed that in exchange for kickback payments he would refrain from conduct that would unfavorably affect the subcontractor’s business relationship with the prime contractor and would help ensure that the subcontractor got more business.
As part of his guilty plea, Villalobos admitted that from June 2009 to December 2014, he received approximately 57 separate wire transfers totaling more than $1.9 million in kickback payments from various foreign and domestic bank accounts controlled by the subcontractor. At two separate meetings in 2015, Villalobos accepted envelopes from the subcontractor containing cash kickbacks totaling $60,000. Between June 2009 and February 2015, Villalobos attempted to conceal his receipt of the kickbacks by forming nominee entities and opening nominee bank accounts. Villalobos also admitted that he evaded paying income taxes on the kickback payments by causing false federal income tax returns to be filed with the Internal Revenue Service (IRS).
In addition to his prison sentence, the court ordered Villalobos to pay $542,562 in restitution to the IRS. As part of his plea agreement, Villalobos also agreed to be permanently debarred from federal government contracting. And, in case you are wondering, the subcontractor is also headed to prison.
So when you cheat the Government, be prepared to be prosecuted for your theft and tax evasion. Thank you Al Capone.