Score:   1
Docket Number:   D-MD  1:19-cr-00387
Case Name:   USA v. Richison
  Press Releases:
Baltimore, Maryland – U.S. District Judge George L. Russell, III today sentenced David Richison, age 64, of Frederick, Maryland, to 48 months in federal prison for wire fraud and aiding in the filing of a false tax return.  Richison, who owned and operated a payroll processing business, took funds from his clients’ tax escrow account and used them to pay his own personal expenses.  Judge Russell also ordered restitution and forfeiture in the amount of the victims' full loss, which will be determined after a restitution hearing.

The sentence was announced by United States Attorney for the District of Maryland Robert K. Hur; Special Agent in Charge Kelly R. Jackson of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office; and Special Agent in Charge Timothy M. Dunham of the Criminal Division of the FBI Washington Field Office.

"After years of deceiving his clients for his own personal benefit, Richison is now feeling the consequences of his despicable actions," said IRS-CI Special Agent in Charge Kelly R. Jackson.  "We will continue to work with the United States Attorney's Office to pursue justice of those who violate our tax laws, especially those who commit fraud at the expense of others."

According to his plea agreement, Richison owned and operated a Frederick-based payroll processing business, Period Financial, doing business as Period Payroll.  Period Payroll provided payroll processing and payroll tax payment services to businesses in Maryland and Virginia, using special software specifically designed by Richison.  In addition to printing paychecks for client employees, Period Payroll was responsible for calculating the employment taxes owed to federal and state taxing authorities by the client companies and those companies’ employees, as well as preparing and filing the client companies’ employment tax returns. 

Period Payroll clients entrusted Richison with the authority to remove funds directly from their bank accounts to pay their federal and state taxes, as well as to pay fees to Period Payroll.  Richison’s practice was to send the clients a copy of the tax return to be filed and an accounting of the funds to be removed from their accounts and subsequently paid over.  Funds removed from client accounts were placed into an escrow account, which Richison used to make electronic payments to the IRS, generating a unique number for each wire sent on behalf of a client.

Richison admitted that from at least 2012 through 2014, the tax forms prepared and filed by Richison on behalf of Period Payroll clients properly reported the amount of taxes owed, but a corresponding amount of tax deposits was not made with the IRS.  Richison began taking money from the client escrow fund to pay for his own personal and business-related expenses, such as legal fees, rather than paying those funds to the IRS, as he represented to his clients.

For example, in July 2012, Richison transferred $53,000 from the client escrow account to his personal attorney to pay legal fees.  Over the course of 2013 and 2014, the frequency with which Richison failed to pay over client funds to the IRS increased.  When clients received notices from the IRS that their employment taxes had not been paid, Richison provided false explanations for the missed payments and falsely promised to make the payments and cover the penalties and interest.  To further conceal the scheme, Richison used one client’s escrowed funds to pay another client’s debt, penalties, and interest, without informing either client that he was doing so.  In addition, Richison sent e-mails to clients falsely stating that he had made payments to the IRS on their behalf and provided as proof the wire numbers of transfers that he had made on behalf of other clients.  Between approximately February 2013 and December 2014, Richison used approximately $598,365 of client escrow funds to make payments to the IRS to cover the penalties and interest his clients had accrued in order to conceal the fraud and continue to deceive his clients into thinking that Period Payroll was solvent.

By the end of 2014, there were insufficient funds in the client escrow account to cover the mounting debts and Richison closed Period Payroll.  By that time, the difference between the amount taken from clients and reported to have been paid to the IRS per the tax returns filed on behalf of clients, and the actual payments made as required by those returns totaled at least $1,622,481.56.

United States Attorney Robert K. Hur commended the IRS Criminal Investigation and the FBI Washington Field Office for its work in the investigation.  Mr. Hur thanked Assistant U.S. Attorney Sean Delaney, who prosecuted the case.

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Baltimore, Maryland – David Richison, age 64, of Frederick, Maryland, who owned and operated a payroll processing business, pleaded guilty today to federal charges of wire fraud and aiding in the filing of a false tax return, in connection with a fraud scheme in which he took funds from his clients’ tax escrow account and used them to pay his own personal expenses. 

The guilty plea was announced by United States Attorney for the District of Maryland Robert K. Hur and Special Agent in Charge Kelly R. Jackson of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office.

According to his plea agreement, Richison owned and operated a Frederick-based payroll processing business, Period Financial, doing business as Period Payroll.  Period Payroll provided payroll processing and payroll tax payment services to businesses in Maryland and Virginia, using special software specifically designed by Richison.  In addition to printing paychecks for client employees, Period Payroll was responsible for calculating the employment taxes owed to federal and state taxing authorities by the client companies and those companies’ employees, as well as preparing and filing the client companies’ employment tax returns. 

Period Payroll clients entrusted Richison with the authority to remove funds directly from their bank accounts to pay their federal and state taxes, as well as to pay fees to Period Payroll.  Richison’s practice was to send the clients a copy of the tax return to be filed and an accounting of the funds to be removed from their accounts and subsequently paid over.  Funds removed from client accounts were placed into an escrow account, which Richison used to make electronic payments to the IRS, generating a unique number for each wire sent on behalf of a client.

Richison admitted that from at least 2012 through 2014, the tax forms prepared and filed by Richison on behalf of Period Payroll clients properly reported the amount of taxes owed, but a corresponding amount of tax deposits was not made with the IRS.  Richison began taking money from the client escrow fund to pay for his own personal and business-related expenses, such as legal fees, rather than paying those funds to the IRS, as he represented to his clients.

For example, in July 2012, Richison transferred $53,000 from the client escrow account to his personal attorney to pay legal fees.  Over the course of 2013 and 2014, the frequency with which Richison failed to pay over client funds to the IRS increased.  When clients received notices from the IRS that their employment taxes had not been paid, Richison provided false explanations for the missed payments and falsely promised to make the payments and cover the penalties and interest.  To further conceal the scheme, Richison used one client’s escrowed funds to pay another client’s debt, penalties, and interest, without informing either client that he was doing so.  In addition, Richison sent e-mails to clients falsely stating that he had made payments to the IRS on their behalf and provided as proof the wire numbers of transfers that he had made on behalf of other clients.  Between approximately February 2013 and December 2014, Richison used approximately $598,365 of client escrow funds to make payments to the IRS to cover the penalties and interest his clients had accrued in order to conceal the fraud and continue to deceive his clients into thinking that Period Payroll was solvent.

By the end of 2014, there were insufficient funds in the client escrow account to cover the mounting debts and Richison closed Period Payroll.  By that time, the difference between the amount taken from clients and reported to have been paid to the IRS per the tax returns filed on behalf of clients, and the actual payments made as required by those returns totaled at least $1,622,481.56.

As part of his plea agreement, Richison will be required to pay restitution in the full amount of the victims’ losses, which is agreed to be at least $1,609,561.59.

Richison faces a maximum sentence of 20 years in federal prison for wire fraud and a maximum of three years in federal prison for aiding in the filing of a false tax return.  U.S. District Judge George L. Russell, III has scheduled sentencing for November 26, 2019 at 9:30 a.m.

United States Attorney Robert K. Hur commended the IRS Criminal Investigation for its work in the investigation.  Mr. Hur thanked Assistant U.S. Attorney Sean Delaney, who is prosecuting the case.

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Description: The fiscal year of the data file obtained from the AOUSC
Format: YYYY

Description: The code of the federal judicial circuit where the case was located
Format: A2

Description: The code of the federal judicial district where the case was located
Format: A2

Description: The code of the district office where the case was located
Format: A2

Description: Docket number assigned by the district to the case
Format: A7

Description: A unique number assigned to each defendant in a case which cannot be modified by the court
Format: A3

Description: A unique number assigned to each defendant in a case which can be modified by the court
Format: A3

Description: A sequential number indicating whether a case is an original proceeding or a reopen
Format: N5

Description: Case type associated with the current defendant record
Format: A2

Description: A concatenation of district, office, docket number, case type, defendant number, and reopen sequence number
Format: A18

Description: A concatenation of district, office, docket number, case type, and reopen sequence number
Format: A15

Description: The status of the defendant as assigned by the AOUSC
Format: A2

Description: A code indicating the fugitive status of a defendant
Format: A1

Description: The date upon which a defendant became a fugitive
Format: YYYYMMDD

Description: The date upon which a fugitive defendant was taken into custody
Format: YYYYMMDD

Description: The date when a case was first docketed in the district court
Format: YYYYMMDD

Description: The date upon which proceedings in a case commenced on charges pending in the district court where the defendant appeared, or the date of the defendant’s felony-waiver of indictment
Format: YYYYMMDD

Description: A code used to identify the nature of the proceeding
Format: N2

Description: The date when a defendant first appeared before a judicial officer in the district court where a charge was pending
Format: YYYYMMDD

Description: A code indicating the event by which a defendant appeared before a judicial officer in the district court where a charge was pending
Format: A2

Description: A code indicating the type of legal counsel assigned to a defendant
Format: N2

Description: The title and section of the U.S. Code applicable to the offense committed which carried the highest severity
Format: A20

Description: A code indicating the level of offense associated with FTITLE1
Format: N2

Description: The four digit AO offense code associated with FTITLE1
Format: A4

Description: The four digit D2 offense code associated with FTITLE1
Format: A4

Description: A code indicating the severity associated with FTITLE1
Format: A3

Description: The title and section of the U.S. Code applicable to the offense committed which carried the second highest severity
Format: A20

Description: A code indicating the level of offense associated with FTITLE2
Format: N2

Description: The four digit AO offense code associated with FTITLE2
Format: A4

Description: The four digit D2 offense code associated with FTITLE2
Format: A4

Description: A code indicating the severity associated with FTITLE2
Format: A3

Description: The FIPS code used to indicate the county or parish where an offense was committed
Format: A5

Description: The date of the last action taken on the record
Format: YYYYMMDD

Description: The date upon which judicial proceedings before the court concluded
Format: YYYYMMDD

Description: The date upon which the final sentence is recorded on the docket
Format: YYYYMMDD

Description: The date upon which the case was closed
Format: YYYYMMDD

Description: The total fine imposed at sentencing for all offenses of which the defendant was convicted and a fine was imposed
Format: N8

Description: A count of defendants filed including inter-district transfers
Format: N1

Description: A count of defendants filed excluding inter-district transfers
Format: N1

Description: A count of original proceedings commenced
Format: N1

Description: A count of defendants filed whose proceedings commenced by reopen, remand, appeal, or retrial
Format: N1

Description: A count of defendants terminated including interdistrict transfers
Format: N1

Description: A count of defendants terminated excluding interdistrict transfers
Format: N1

Description: A count of original proceedings terminated
Format: N1

Description: A count of defendants terminated whose proceedings commenced by reopen, remand, appeal, or retrial
Format: N1

Description: A count of defendants pending as of the last day of the period including long term fugitives
Format: N1

Description: A count of defendants pending as of the last day of the period excluding long term fugitives
Format: N1

Description: The source from which the data were loaded into the AOUSC’s NewSTATS database
Format: A10

Description: A sequential number indicating the iteration of the defendant record
Format: N2

Description: The date the record was loaded into the AOUSC’s NewSTATS database
Format: YYYYMMDD

Description: Statistical year ID label on data file obtained from the AOUSC which represents termination year
Format: YYYY

Data imported from FJC Integrated Database
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