Payroll Company CEO Albert Cipoletti, Who Defrauded Sacramento County and Others of More than $20 Million Sentenced to Prison

Source- http://sacramento.fbi.gov/dojpressrel/pressrel11/sc050611.htm

SACRAMENTO, CA—United States Attorney Benjamin B. Wagner announced today that Albert Cipoletti, 62, of Northport, N.Y., was sentenced today by United States District Judge Garland E. Burrell Jr. to six-and-a-half years in prison, to be followed by three years of supervised release, in connection with a scheme to divert more than $20 million from Sacramento County as well as two other businesses: SanDisk Corporation (SanDisk) and The Stanley Works and Stanley Solutions Inc. (Stanley). As part of the sentence, Cipoletti was ordered to pay $19,141,618 in restitution. On October 29, 2010, he pleaded guilty to one count of wire fraud.

This case is the product of an extensive investigation by the Federal Bureau of Investigation and Internal Revenue Service, Criminal Investigation. The County of Sacramento reported the offense to federal law enforcement and has assisted with the investigation. Assistant United States Attorney S. Robert Tice-Raskin is prosecuting the case.

U.S. Attorney Wagner said: "These defendants cheated the IRS, Sacramento County, and some of their other clients over a long period of time, causing millions of dollars in losses. Those who are entrusted to handle public funds have a responsibility to preserve and protect those funds. As this prison sentence makes clear, persons who cheat the public will pay a steep price."

"Payroll companies who are hired to handle various financial affairs for employers, but who intentionally fail to remit withheld employment taxes are not only enriching themselves, they are creating financial problems for the employees," stated IRS Criminal Investigation Special Agent in Charge Scott O'Briant. "The defendant in this case wrongfully diverted over $20 million in tax withholding, which should have been remitted to the IRS on behalf of the clients' employees. Today's sentence should be a warning that IRS Criminal Investigation will always be there to pursue those individuals who play fast and loose with other people's money for their own personal gain."

Special Agent in Charge of the Sacramento FBI office Herbert Brown said "Today's fraud schemes are more sophisticated than ever, and this case is yet another example of the complex white collar crime cases we continue to see across the nation. The FBI is committed to using our skills and resources, as well as working with our law enforcement partners, to track down the culprits and bring them to justice."

According to court documents, Cipoletti was the chief executive officer of Ingentra HR Services Inc. (Ingentra), a payroll services corporation in Hauppauge, N.Y. Ingentra, then known as Humanic Solutions Inc, was hired by Sacramento County in late 2004 to process the payrolls for Sacramento County's Special Districts (including the Sacramento Metropolitan Fire District, the cemetery district, the parks and recreation district, independent contractors, and various elected officials). As part of the payroll services, Ingentra calculated the tax payments for the clients and the clients' employees and then transmitted the payments to the state and federal tax authorities. Ingentra was responsible for paying the IRS the income tax withholdings to the IRS and to file the Employer's Quarterly Federal Tax Form (Form 941) with the IRS on behalf of the clients. (Form 941 includes totals for number of employees, total pay for the period being reported, and amounts withheld from the pay of the employees.)

According to Cipoletti's plea agreement, from 2005 until April 2010, he and co-defendant Kerry Seaman, comptroller for Ingentra, devised a scheme to defraud the County of Sacramento - Special Districts, SanDisk, and Stanley of the tax withholdings intended to be paid to the IRS by collecting the correct amount from the clients but under reporting to the IRS the amount owed and diverting the difference to Ingentra's operating account for Ingentra's use.

According to the plea agreement, Cipoletti and Seaman sent funding letters to the clients that correctly calculated payroll and federal tax withholdings for the clients' employees, and these clients wire transferred funds to Ingentra for the purposes of paying both the payroll and taxes. Cipoletti and Seaman then filed false 941s to the IRS, understating the true employee tax withholdings for these clients. Cipoletti and Seaman wrongfully diverted in excess of $20 million in tax withholdings from clients Stanley, SanDisk, and Sacramento County that should have been remitted to the IRS on behalf of these clients and these clients' employees.

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