Former Security Company Operator Sentenced to Prison for Employment Tax Fraud

A former Washington, D.C., businessman was sentenced today to serve three and one-half years in prison for employment tax fraud, announced Acting Deputy Assistant Attorney General Larry J. Wszalek of the Justice Department’s Tax Division. 

Jeffrey Norman Jackson, who currently resides in Maryland, previously pleaded guilty to failing to file federal employment tax returns and failing to pay over approximately $600,000 in employment taxes.  In addition to 42 months in prison, Jackson was sentenced to three years of supervised released, ordered to perform 360 hours of community service and ordered to pay $595,687.39 in restitution to the Internal Revenue Service (IRS).

“Business owners have a responsibility to their employees and the IRS to honestly collect, account for and pay over employment taxes to the IRS,” said Acting Deputy Assistant Attorney General Wszalek.  “As evidenced by today’s sentencing, employers like Jeffrey Jackson, who willfully evade their employment tax obligations, will be prosecuted to the fullest extent and face lengthy terms of imprisonment and substantial financial penalties.”

According to court documents, Jackson operated Innovative Security Services LLC (Innovative) in the District of Columbia.  From 2006 through 2010, Jackson controlled the company’s finances and was responsible for filing the Employer’s Quarterly Federal Tax Returns (IRS Forms 941).  He was also responsible for paying over to the IRS the federal income, social security and Medicare taxes, known as Federal Insurance Contributions Act (FICA) taxes, that were withheld from the wages of Innovative’s employees.

Instead of paying the taxes that were due and owing to the IRS over the four-year period, Jackson diverted money from the company for his personal use.  He used company funds to pay rent and buy furniture for his personal residence, spent more than $21,000 at the men’s clothing store Everett Hall and made other personal expenditures at Nordstrom and Tiffany & Co.  Jackson also paid more than $10,000 for his gym membership and personal training sessions and paid $10,000 to his childcare provider. 

Jackson has a previous federal conviction related to the theft of employment taxes.  In 2006, he pleaded guilty to bankruptcy fraud after he stole $373,429.57 from a bank account that was set up to pay the payroll taxes for Jackson’s former company, Unlimited Security Inc., while that company was proceeding through Chapter 11 bankruptcy.  In that case, Jackson used the stolen funds to support a boxing promotion business that he controlled and to pay professional boxers. 

Acting Deputy Assistant Attorney General Wszalek commended the special agents of IRS-Criminal Investigation, who investigated the case, and Trial Attorney Melissa S. Siskind of the Tax Division, who prosecuted the case.  He also thanked the U.S. Attorney’s Office of the District of Columbia for their substantial assistance.