BOSTON - A Windham, N.H. man was sentenced today in federal court for tax evasion and conspiracy to defraud the United States.

CHRISTOPHER MCGADDEN, 65, was sentenced by U.S. District Judge William G. Young to one year and one day in federal prison to be followed by two years of supervised release, a $7,500 fine, and restitution to the Internal Revenue Service in the amount of $178,735, In March, McGadden pleaded guilty to charges of conspiracy to defraud the United States through the evasion of the assessment of income taxes and tax evasion. In imposing this sentence, Judge Young stated, “tax violations require a sentence in prison.”

Had the case proceeded to trial the Government’s evidence would have proven that McGadden engaged in a conspiracy with Raymond Stebbins to divert monies from Xcel Fire Protection, Inc. (Xcel) to various corporate bank accounts, which the two men then used to pay themselves without reporting the income to the IRS. Xcel is a fire protection sprinkler business specializing in the design, installation and service of indoor sprinkler systems. Xcel is based in Salem, N.H., and McGadden was its longtime General Manager. The conspiracy began in 2000 and continued until May 2009.

According to the government, Stebbins submitted fictitious invoices to Xcel, allegedly billing for goods provided and/or services rendered by one of several companies Stebbins operated. McGadden ensured that these bogus invoices were paid and also provided the checks in payment of the bogus invoices to Stebbins.

Stebbins also opened several business bank accounts which were used to deposit checks from Xcel. Thereafter, Stebbins structured cash withdrawals from the business bank accounts, keeping a ten percent fee for himself and giving the remaining 90 percent to McGadden. McGadden and Stebbins also diverted checks from Xcel customers to Stebbins’ business accounts, sharing the proceeds of those checks using the same 90/10 split. Neither McGadden nor Stebbins reported the funds that they received under their scheme as income on their federal income tax returns. In addition, McGadden separately concealed other income from the IRS that was rightfully the property of Xcel, including checks from Xcel customers and Stebbins’ payroll checks.

McGadden was ordered to report to the Bureau of Prisons to begin serving his sentence on Nov. 8, 2011.

United States Attorney Carmen M. Ortiz, William P. Offord, Special Agent in Charge of Internal Revenue Service, Criminal Investigation - Boston Field Division, and Cortez Richardson, Special Agent in Charge of the Department of Housing and Urban Development, Office of Inspector General, Boston Field Office, made the announcement today. The case was prosecuted by Assistant U.S. Attorney Diane Freniere of Ortiz's Public Corruption and Special Prosecutions Unit.
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