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Westchester County resident George Sanossian, age 70, of Scarsdale, and New Jersey resident Jack Sardis, age 66, of Englewood Cliffs, both certified public accountants, admitted to conspiracy to defraud the IRS by scheming with clients to reduce tax liabilities through a shell company, leading to over $2 million in unreported cash transactions.
The two entered their pleas in White Plains federal court.
Sanossian and Sardis worked at the Scarsdale firm that provided accounting, income, and payroll tax services to clients, including nine businesses in the construction industry.
According to federal prosecutors and statements made in court:
From 2012 through 2018, the two agreed with clients to fraudulently reduce their income tax liability, conceal wages paid to employees by the clients, and thereby fraudulently reduce the clients’ payroll tax liability and conceal their income.
The defendants advised the Clients to participate in a scheme to reduce their federal income and payroll tax liability.
Pursuant to this scheme, the clients issued checks payable to a shell company and gave the checks to Sanossian and Sardis. They then cashed the checks at a check cashing service and returned the cash, minus a fee, to the clients.
Some clients used the cash to pay employees without reporting the cash wages on their IRS Form 941, evading their employer contributions to Social Security and Medicare and their obligation to withhold income tax on those wages, which permitted the employees to evade federal and state income tax.
Some clients' owners and managers took the cash for personal use without reporting the income on their personal federal and state tax returns.
Sanossian and Sardis caused checks to be cashed in this manner for clients in a total amount exceeding $2 million.
US Attorney for the Southern District of New York Damian Williams said in a statement: "This case serves as a reminder to all Americans that they are required to truthfully report their earnings and that criminal penalties could await those who fraudulently deceive the IRS, as George Sanossian and Jack Sardis have learned.
"My office will continue to hold to account those who scheme to impede the lawful functions of the IRS.”
Sentencing is scheduled for late September 2024. Restitution to the IRS and New York State totals $652,883.60.
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