Wednesday, April 3, 2013

Elderly Maryland Man Sentenced To Jail For Embezzling $415K From Social Security Admin's Employee Association

Jail for 76-Year-Old Ellicott City Man for Embezzlement, Tax Evasion

Salvatore Petti stole more than $415,000 from the Social Security Administration's employee association.

By Brandie Jefferson

A 76-year-old Ellicott City man was sentenced Wednesday to more than a year in prison for tax evasion and embezzling more than $415,000 from Social Security Administration’s (SSA) employee association, according to a statement released by Maryland’s U.S. Attorney’s office.

Salvatore Petti retired from the SSA as a district director after more than 40 years with the government agency, according to the U.S. Attorney’s office. He worked at the Employees Activities Association, which provided health and recreational programs for SSA employees, after his retirement from SSA and from 2005 – 2008 earned $60,000 a year at that job.

According to the State’s Attorney, Petti did not report any of his EAA income to the IRS between 2006 and 2008; by February 1999, he had not reported any income at all since at least 1998.

He avoided having Social Security, Medicare and income taxes taken from his check by classifying himself as an independent contractor, but did not fill out the required Form 1099.

After an audit from the IRS, Petti filed amended tax returns for 2006 – 2009, according to the U.S. Attorney, but he made up expenses “supplies,” “travels,” “utilities,” and “office expenses.”

During the ensuing investigation, the IRS determined Petti had also been embezzling “substantial funds” from the EAA by issuing himself unauthorized checks for “administrative expenses” or “general expenses.” He did not report the $416,134 of addition income on any tax returns.

“Mr. Petti’s act of intentionally under-reporting income on his federal tax returns is unlawful,” Thomas J. Kelly, Special Agent in Charge, IRS Criminal Investigation, said in a statement.

“Today’s sentence demonstrates the collaborative effort between IRS Criminal Investigation and its federal law enforcement partners in bringing individuals to justice who choose to engage in any financial scheme to defraud the American public.”

U.S. District Judge J. Frederic Motz sentenced Petti to 15 months in prison followed by three years of supervised release.

From the Ellicott City Patch

Hat tip: FraudTalk reader Joe

1 comment:

Anonymous said...

Petti only agreed to plea to the embezzlement charges AFTER the IRS threatened to go after Petti's wife and children. The EAA had time sheets for Petti PROVING Petti earned the money and did not steal it but EAA president Mike Reynolds forced Petti to classify the payments as expenses. No charges were filed against Reynolds who orchestrated the scheme.