The owner of a Scottsville business has been accused of avoiding paying employment taxes over a three-year period.
John Paul Cates, 48, of Alvaton, was indicted Sept. 15 by a federal grand jury on a count of tax evasion.
The criminal charge against Cates stems from his management of Trinity Steel Works, a Scottsville company that online records with the Kentucky secretary of state show was organized in 2011.
Federal prosecutors claim Cates willfully attempted to avoid paying employment taxes owed by Trinity from the second quarter of 2014 through the second quarter of 2017, with the exception of the first quarter of 2015.
The indictment alleges Cates committed multiple acts in an effort to avoid paying the taxes.
The alleged acts included creating the corporations Cates Cattle Co. LLC and TSW Fabrication Inc. and placing them in the names of other people to conceal his control over them; using bank accounts in the name of a relative and Cates Cattle Co. LLC to transfer funds out of Trinity Steel Works and TSW Fabrication while still maintaining control over those funds; using Trinity Steel Works to pay for more than $285,000 in personal expenses; and transferring business and personal real estate in 2017 to Cates Cattle Co.
Cates is also alleged to have deposited checks from clients made out to Trinity Steel Works into the bank account for TSW Fabrication and depositing TSW Fabrication checks into accounts for Cates Cattle Co. while claiming that TSW Fabrication was paying back loans to the cattle company.
The case was investigated by the IRS Criminal Investigations branch.
“Employers have a responsibility to their employees to withhold the proper amount of taxes and pay those taxes over to the IRS,” IRS Criminal Investigations Special Agent in Charge Bryant Jackson said in a news release. “When employers fail to do so, it affects revenue to the United States government, but more importantly, it affects their employees’ Medicare and Social Security benefits.”
Cates is set to be arraigned Sept. 29 in U.S. District Court. Online federal court records do not list an attorney for Cates.
The maximum penalties for tax evasion are five years in prison or a $250,000 fine.
– Follow courts reporter Justin Story on Twitter @jstorydailynews or visit bgdailynews.com.