Pamela Smith, the former chief financial officer for Stratford-based Equinox Home Care LLC (EHC), has pleaded guilty to federal charges of aiding in the preparation of a false tax return.
According to the charges filed by federal prosecutors, Smith was part of a scheme to provide Theresa Foreman, the company”™s co-founding partner, with funds made to “ghost employees” who did not work for EHC. Foreman used these funds for payments to purchase ownership of EHC from a former business partner.
The payments to the “ghost employees” began in 2012, and Smith and Foreman expanded the scheme to include false bonus checks to approximately 30 EHC employees who would cash the checks and give the funds directly to Foreman. However, some of the employees later realized they were taxed for these funds on their W-2 tax forms.
Furthermore, Foreman received funds through cashed mileage checks that were issued to two individuals who did not drive on behalf of EHC. Smith worked with the company”™s tax return preparer and did not disclose this scheme ”“ in 2014, Foreman”™s tax return omitted more than $600,000 of these funds.
Foreman pleaded guilty to one count of tax evasion. On Jan. 6 she was sentenced to 12 months and one day of imprisonment and ordered to pay $641,941.46 in restitution. Smith faces a maximum term of imprisonment of three years, and as part of the plea agreement the government stated that approximately $266,000 of a tax loss was foreseeable to Smith as a result of her conduct. A sentencing date for Smith has not been scheduled.
