Baltimore, Maryland – Crystal Powell-Jones, age 54, of Laurel, Maryland, pleaded guilty today to failure to pay to the IRS employment taxes withheld from employees’ wages and to wire fraud in connection with a scheme to defraud at least four victim lenders.
The guilty plea was announced by Acting United States Attorney for the District of Maryland Jonathan F. Lenzner; Acting Special Agent in Charge Darrell J. Waldon of the Internal Revenue Service - Criminal Investigation (IRS-CI), Washington, D.C. Field Office; and Chief Melissa R. Hyatt of the Baltimore County Police Department.
According to her guilty plea, from August 2012 to October 2017, Jones operated and was the managing partner of JAG Professional Resources (“JAG”), a temporary staffing agency that provided hourly labor to municipal governments and agencies. As JAG’s managing partner, Jones exercised control over all of JAG’s business affairs, including JAG’s finances and bank account. Individual 1 was a silent minority partner in JAG.
Between at least October 2012 and August 2017, Jones devised a scheme to defraud Victim Lender 1, a factoring company; Victim Lender 2, an automobile financing service; Victim Lender 3, a mortgage banking company; and Victim Lender 4, a personal finance company.
As detailed in the plea agreement, Jones obtained factoring services from Victim Lender 1 for JAG from February 2013 to October 2016. Factoring is a means by which cash intensive businesses, like JAG, could obtain cash quickly and reliably by leveraging accounts receivable. JAG was a cash intensive business because JAG had to pay its temporary employees weekly or biweekly, but typically did not receive payment from its clients until at least 30 days after services had been rendered. Specifically, JAG sold its account receivables to Victim Lender 1 and, in return, JAG received cash advances from Victim Lender 1 totaling approximately 90% of JAG’s accounts receivables. Upon receiving payments from JAG’s clients on the outstanding invoices, Victim Lender 1 sent JAG the remaining 10% of the invoice that had been purchased, less fees Victim Lender 1 charged for its factoring services.
From March 2016 to about May 2016, Jones caused JAG to sell Victim Lender 1 fraudulent invoices totaling more than $350,000 for services that JAG had purportedly provided to a City in Ohio. The City in Ohio had contracted with JAG for temporary employment services beginning in February 2013, but JAG’s relationship with the City in Ohio ended in about February 2016. In total, Victim Lender 1 paid at least $347,993.13 to JAG as a result of fraudulent invoices Jones caused JAG to sell Victim Lender 1.
In October 2012, Jones and her co-borrower, financed the purchase of a 2012 Ford Fusion. To obtain financing, Jones falsely stated she had been employed as JAG’s accountant for four years on an Applicant’s Credit Statement. Jones also submitted a fraudulent bank statement for financing which listed Jones and another individual when, in fact, the bank statement solely belonged to Individual 1.
Subsequently, Victim Lender 2 provided Jones and Individual 1 with financing of $19,657.50 toward the purchase of Jones’s car. Victim Lender 2 suffered a loss of $5, 422.60 after Jones declared bankruptcy and failed to satisfy the debt.
The plea further details that in November 2015, Jones submitted a Uniform Residential Loan Application to Victim Lender 3 in the effort to finance a Laurel, Maryland residence. Jones provided false and misleading information, including that she had been employed with JAG for two years as an accountant, that she was not self-employed, and listed a bank account with a balance of $44,435.26. In fact, Jones’s bank account had a balance of $4,425.26 at the time. Relying on the false documents provided by Jones, Victim Lender 3 provided $417,302 in financing for the purchase of Jones’s residence.
In addition, Jones admitted that in October 2016, she submitted a loan application in the name of Individual 2 to Victim Lender 4. The contact information was an email address and phone number controlled by Jones. The loan application falsely listed that Individual 2 was a JAG employee who earned an annual salary of $75,000. In furtherance of the scheme, Jones completed an employment verification form in which Jones stated that Individual 2 was employed for two years with the salaries of $75,000 and $68,000, respectively. Jones also provided a fraudulent paystub that stated JAG had paid wages to Individual 2 in September 2016. In fact, Individual 2 received no wages from JAG in 2016. Victim Lender 4 approved the loan application and wired $66,708 into a bank account in Jones’s name. In 2017, Jones conducted a similar scheme to defraud with Individual 3 and received at least $29,000 in loan proceeds.
Lastly, from January 2014 to October 2016, JAG Professional Resources paid wages totaling approximately $3,851,994.00. During this period, Jones willfully failed to pay employment taxes to the IRS and failed timely to pay state unemployment and workers’ compensation duties. These failures resulted in additional tax losses to the state in which JAG operated and prevented JAG’s employees from collecting unemployment and worker’s compensation benefits to which they may have otherwise been entitled.
Jones admitted that she did not maintain reliable or accurate business records, including payroll and tax withholding documentation. JAG employees often received incorrect payment for labor and were not paid for all hours worked, including overtime hours. When JAG issued wages, correct or incorrect, it did so while purportedly withholding employment taxes on the employees’ behalf. Additionally, at Jones’s direction, JAG annually issued IRS Form W-2s to its employees that stated employment taxes, including FICA, Social Security, and Medicare, were withheld from the wages paid to the employee. In fact, Jones failed to file a single Employer’s Quarterly Federal Income Tax Return for the 2014 Tax year, an IRS Form 941. As a result of failing to pay the IRS employment taxes from January 2014 to October 2016, Jones caused a tax loss to the IRS of at least $523,244.38.
As a result of Jones’ criminal activity, the United States and victim lenders sustained a total loss of at least $1,196,085.35 ($225,516.28 to the victim lenders and the remainder to the United States).
Jones faces a maximum sentence of 20 years in prison for wire fraud and a maximum of five years in prison for failure to pay to the IRS employment taxes withheld from employees’ wages. U.S. District Judge George L. Russell, III has scheduled sentencing for July 30, 2021 at 11:30 a.m.
Acting United States Attorney Jonathan F. Lenzner commended the IRS-CI and the Baltimore County Police Department for their work in the investigation. Mr. Lenzner thanked Assistant U.S. Attorneys Dana J. Brusca and Harry M. Gruber, who are prosecuting this case.
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Former Owner of a Temporary Employment Agency Pleads Guilty to Wire Fraud and Failure to Pay IRS Employment Taxes - Department of Justice
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