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January 7, 2020

‘Ghost' employee scheme leads to prison sentence

PHOTO | Pixabay.com
By Michelle Tuccitto Sullo

A woman who owned and operated a Stratford home health-care staffing agency was sentenced Monday to a year in prison for a tax-evasion scheme.

Theresa Foreman, 58, who now resides in Hamden, pleaded guilty to one count of tax evasion last March. 

U.S. District Court Judge Victor Bolden imposed the sentence in a proceeding in Bridgeport. After Foreman serves her sentence, she will be on supervised release for three years. 

Foreman is currently free on a $10,000 bond, but she must report to the federal Bureau of Prisons on Feb. 28.

Assistant U.S. Attorneys Peter S. Jongbloed and Jennifer R. Laraia prosecuted the case for the government.

“The defendant, who operated a successful business, defrauded the U.S. Treasury of over $600,000 in tax revenue — lied to the IRS, and engaged in a sophisticated scheme to siphon money to herself,” prosecutors wrote in a pre-sentencing memorandum to the court. 

Prosecutors asserted that Foreman “lived an extravagant lifestyle,” with properties in Madison and Florida and expensive vehicles. 

Foreman’s company, Equinox Home Care LLC, was originally established as a partnership. Foreman and her former partner became embroiled in a dispute, and Foreman ultimately was obligated to buy out her partner’s interest in the business for $2 million, court documents show.

Around the same time, starting around 2012, Foreman took money from Equinox by depositing or cashing checks written to individuals who didn’t actually work there, or “ghost” employees, prosecutors said. 

Between May 2012 and December 2013, checks totaling some $413,000 were deposited into accounts controlled by Foreman’s brother. In the same time frame, about $465,000 was withdrawn from these accounts through cash, cash back from deposits, and checks payable to Foreman, according to the U.S. Attorney’s office. Foreman had employees cash company checks and give her the money, and cashed mileage reimbursement checks made out to other individuals which she then used for her own benefit. 

Between August 2014 and November 2015, Foreman made or directed 101 cash deposits totaling $580,580 to a bank account in a family member’s name, documents show.

According to federal prosecutors, Foreman failed to report any money she received through the scheme on her federal tax returns. In 2013, she allegedly told the IRS she had no monthly income.

Foreman’s conduct for the 2010 through 2014 tax years resulted in a $641,941 loss to the Internal Revenue Service. As part of her sentence, Foreman must pay all back taxes, plus penalties and interest. 

Attorney David T. Grudberg of New Haven, who represented Foreman, asked for leniency.

He said his client was orphaned at a young age and was subsequently raised in an abusive environment. He also noted in a pre-sentencing memorandum that his client has taken “substantial, voluntary steps to make financial amends for her misconduct.”

Grudberg noted how the conduct occurred after the partnership dispute resulted in his client having to buy out her former partner at considerable expense. 

Grudberg asserted that his client has already suffered due to her actions, including losing her business. 

“Ms. Foreman has lost what was certainly her proudest professional accomplishment — Equinox, the company she built up by dint of her own labor to a thriving home health-care business employing upwards of 75 people,” Grudberg wrote.

According to Grudberg, after Foreman pleaded guilty, she was forced to divest her ownership stake in the business. She also had to sell her real estate in Florida and Madison to make restitution, and now lives with a relative in Hamden, documents show.

Contact Michelle Tuccitto Sullo at msullo@newhavenbiz.com.

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