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Oregon check cashier found guilty in payroll tax fraud scheme

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(The Center Square) – A federal jury in Portland, Oregon, found a man who operated a local chain of check-cashing businesses guilty of a scheme to prevent the IRS from collecting payroll and income taxes on construction workers’ wages.

The jury found David A. Katz, 48, of Tualatin, Oregon, guilty of “conspiracy to defraud the United States and filing false currency transaction reports with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN),” according to the U.S. Attorney for the District of Oregon.

“This defendant’s efforts to help others circumvent their tax responsibilities was thwarted thanks to the dedicated criminal investigators at the IRS,” Natalie Wight, U.S. Attorney for the District of Oregon, said in a statement. “Business owners who abuse the system and help others hide taxable income will be held accountable.”

Between January 2014 and December 2017, Katz, the compliance officer of Check Cash Pacific, Inc., worked with people in the construction industry to defraud the United States government. They did this by paying construction workers under the table.

“To carry out the scheme, sham construction companies were created and used to cash more than $177 million in payroll checks at different Check Cash Pacific locations,” a release explained. “The cash was used to pay construction workers under the table, with no taxes being withheld or reported to the IRS.”

Construction companies notified Katz whenever they planned to bring checks to one of his locations to ensure he had enough cash available to get the transactions done.

“Hundreds of thousands of dollars of payroll checks were cashed daily and Katz was aware that at least one of his co-conspirators used a false name and social security number,” the release said.

Katz got a 2% commission on each transaction, totaling over $4 million. In this time, Katz and his co-conspirators stopped the IRS from collecting more than $44 million in payroll and income taxes on these cash wages.

In December 2021, a federal grand jury in Portland returned a five-count indictment that charged Katz and five other people with conspiracy to defraud the United States. During the same indictment, Katz was also charged with “four counts of filing false currency transaction reports with FinCEN,” the release said.

“Conspiracy to defraud the United States is punishable by up to five years in federal prison, a $250,000 fine, and three years’ supervised release,” the release explained. “Filing false currency transaction reports is punishable by up to 10 years in federal prison, a $250,000 fine, and three years’ supervised release.”

Three of Katz’s co-conspirators have already pleaded guilty to felony charges due to their roles in the conspiracy. Two men await their prison sentences, while the third received a 30-month sentence. Another co-conspirator awaits their trial, and the other is a fugitive.

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