Whatever the recipe, the dough was a little too sticky. According to the Manhattan District Attorney’s Office and a Grand Jury has indicted a bagel wholesaler for Grand Larceny, Offering a False Instrument for Filing and violating the labor law through unemployment insurance tax rate manipulation. Prosecutors allege that the bagel wholesaler, the owner of H & H Bagels, collected, but failed to pay, $369,318.77 withheld from his bagel business employees. This occurred during a six year period from 2003 through his arrest in 2009.
According to the Manhattan District Attorney’s Office: “The investigation further revealed that during the period of this criminal indictment, the bagel wholesaler filed State and City withholding tax returns under six successive company names. Sporadically, he made nominal payments to the New York State Department of Taxation and Finance even though he knew he was obligated to turn over all withheld tax. Through shell companies, he committed unemployment insurance tax rate manipulation by transferring a large segment of his workforce from an existing business to a new business for the purpose of obtaining a lower unemployment insurance tax rate. Although he formed a new company, many of the same workers were being employed at the new company and he was able to therefore obtain an advantageous rate for his unemployment insurance payments to the trust fund operated by the New York State Department of Labor.”
The first prosecution of unemployment insurance tax rate manipulation under the New York State Unemployment Tax Act (also known as the SUTA dumping statute) since it became effective on January 1, 2006, it was stated: “This case is a wakeup call to all employers who fail to fulfill their fiduciary obligation to pay over taxes withheld from their employee’s salaries. It also demonstrates how tax evasion hurts our workers when an employer deliberately fails to contribute the appropriate amount into the unemployment insurance trust fund.”
SUTA is the "State Unemployment Tax Act." SUTA Dumping is an attempt to manipulate businesses to get a lower contribution rate. Employers and their representatives engage in criminal SUTA dumping. They do this to get a lower contribution rate than their unemployment experience allows. This is illegal. Employers who meet either of the following conditions are involved in SUTA dumping if they knowingly attempt to manipulate businesses to get a lower contribution rate: Transferring some or all of their workforce to another business when they own, manage or control at least 10% of both businesses. Acquire another business for the sole purpose of getting a lower contribution rate when they were not previously liable for contributions
The Grand Jury indicted the bagel wholesaler on five counts of Grand Larceny in the Second Degree, a class C felony punishable by up to 15 years in prison; one count of Grand Larceny in the Third Degree, a class D felony punishable by up to 7 years in prison; three counts of Filing in the First Degree, a class E felony punishable by up to 4 years in prison; and two counts of a violation of Labor Law ､581(7)(c)(5) (Unemployment Insurance Tax Rate Manipulation), a class E felony also punishable by up to 4 years in prison.
Under the New York Penal Law, grand larceny in the second degree is committed by any person when he steals property and when:
1. The value of the property exceeds fifty thousand dollars; or
2. The property, regardless of its nature and value, is obtained by extortion committed by instilling in the victim a fear that the actor or another person will (a) cause physical injury to some person in the future, or (b) cause damage to property, or (c) use or abuse his position as a public servant by engaging in conduct within or related to his official duties, or by failing or refusing to perform an official duty, in such manner as to affect some person adversely. Grand larceny in the second degree is a class C felony.
Whatever the appropriate defense might be in this case, he should implement that defense immediately. The Money Laundering and Tax Crimes Unit, a highly skilled boutique unit of the Manhattan District Attorney’s Office, is represented by prosecutors and investigators with significant experience in these types of schemes. As is the case for many of these alleged crimes, the longer the matter progresses without ascertaining and implementing one’s defense, the more difficult it is to defend them.