FREDERICK, Md. (WDVM) — The owner of a Frederick payroll processing business plead guilty Tuesday to federal fraud and tax charges in a scheme with over $1.6 million in losses.
According to the U.S. Attorney’s Office, District of Maryland, David Richison, 64, owner of Period Financial (also known as Period Payroll), took funds from his clients’ tax escrow account and used them to pay his own personal expenses.
According to his plea agreement, Period Payroll provided payroll processing and payroll tax payment services to businesses in Maryland and Virginia, using special software specifically designed by Richison. In addition to printing paychecks for client employees, Period Payroll was responsible for calculating the employment taxes owed to federal and state taxing authorities by the client companies and those companies’ employees, as well as preparing and filing the client companies’ employment tax returns, the attorney’s office said.
Richison admitted that he began taking money from the client escrow fund to pay for his own personal and business-related expenses, such as legal fees, rather than paying those funds to the IRS, as he represented to his clients, according to the attorney’s office.
The attorney’s office said by the end of 2014, Richison closed Period Payroll due to insufficient funds to cover the debt. By that time, the difference between the amount taken from clients and reported to have been paid to the IRS per the tax returns filed on behalf of clients, and the actual payments made as required by those returns totaled at least $1,622,481.56.
As part of his plea agreement, Richison will be required to pay restitution in the full amount of the victims’ losses, which is agreed to be at least $1,609,561.59, according to the attorney’s office.