WHEELING, W. Va. — The owner of a roofing and general contracting company in McMechen has been convicted of fraud.
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Stephen J. Gretchen, 44, failed to report cash payments to his employees and fraudulently collected insurance benefits for staged damage to his vehicle.
He admitted Wednesday he knowingly underreported the wages, tips, and other compensation paid to his employees, paid certain employees in cash “off the books,” filed quarterly tax returns which failed to report these cash payments and failed to withhold certain tax amounts on behalf of his employees.
In the second quarter of 2011, Gretchen reported that he paid no wages, tips, or other compensation to his employees when, in fact, he had paid approximately $22,880.00 to his employees.
He also admitted that he paid one of his employees to deliberately and repeatedly crash a dump truck into his 2011 Coachman Freedom Express camping trailer the trailer, totally destroying it for insurance purposes. Gretchen then filed a claim with his insurance company, but falsely reported the damage was caused by a hit-and-run accident. The insurance company sent Gretchen a check for $27,776.85 via FedEx in June 2012.
The charges Gretchen pleaded guilty Wednesday include:
– One count of Filing a False Form 941, Employees’ Quarterly Federal Tax Return, for which he faces up to three years in prison and a fine of up to $250,000, and
– One count of Mail Fraud for which he faces up to 20 years in prison and a fine of up to $250,000.
“Employers, such as Gretchen, that do not pay employment taxes to the government are not only stealing from the American taxpayers, but could be impacting the future benefits their employees are entitled to for their hard work,” Thomas J. Kelly, Special Agent in Charge of the Internal Revenue Service-Criminal Investigation, Washington, D.C. Field Office said. “Honest, hardworking citizens should be assured that business owners who are not paying their fair share of taxes will be prosecuted.”
Assistant U.S. Attorney Robert McWilliams is prosecuting the case on behalf of the government. The Internal Revenue Service-Criminal Investigation, the United States Postal Inspection Service, and the West Virginia Office of the Insurance Commissioner are investigating.
U.S. Magistrate Judge James E. Seibert presided Wednesday.