Mail Fraud and Tax Evasion—Commonwealth Maintenance Systems, Inc.

Two Massachusetts men have been charged with mail fraud and tax violations in connection with a scheme to overbill Verizon.^[1] Kevin Greelish, who owns Commonwealth Maintenance Systems, Inc. [hereinafter CMS], and George Cullen, who works for Verizon, allegedly engaged together in a mail fraud scheme in which Mr. Greelish caused his company to overbill Verizon to pay kickbacks of a portion of the overpayments to Mr. Cullen.^[2] In all, CMS allegedly defrauded Verizon of about $70,000.^[3] Mr. Greelish is accused of filing a false tax return in 2000 which failed to report all of his income.^[4]

Mr. Greelish also allegedly avoided issuing IRS Form 1099 to CMS’s casual laborers by issuing checks to fictitious names for all payments over $600 in any one year.^[5] Form 1099 is required to be issued whenever wages of more than $600 are issued; Mr. Greelish is accused of issuing a total of $565,000 using fictitious names, which is considered a corrupt obstruction or impedance of the due administration of the Internal Revenue laws.^[6]

Both Mr. Greelish and Mr. Cullen have been charged with mail fraud, and in addition, Mr. Greelish is charged with obstructing and impeding the due administration of the Internal Revenue laws, and with willfully subscribing to a false federal income tax return.^[7]

Mail Fraud
We have previously discussed mail fraud here.

Obstruction of Internal Revenue Laws
Under 26 U.S.C. § 7212(a), it is a crime for a person to corruptly endeavor to obstruct or impede the due administration of the Internal Revenue laws.

The punishment for a violation of section 7212 is a fine of up to $5,000, imprisonment for up to 3 years, or both.

Subscription to a False Federal Income Tax Return
Under 26 U.S.C. § 7206(1), it is a crime for a person to willfully subscribe any tax return which contains or is verified by a written declaration that is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter.

The punishment for a violation of section 7206(1) is a fine of up to $100,000, imprisonment for up to 3 years, or both. Furthermore, the individual must pay the costs of prosecution.

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[1] US Attorney’s Office, Boxford and Randolph Men Charges with Fraud and Tax Violations, Nov. 14, 2005, available here.
[2] Id.
[3] Id.
[4] Id.
[5] Id.
[6] Id.
[7] Id.