Background
Defendants Gregory Gentner and Richard Brasser were executives of rFactr, Inc., responsible for withholding and remitting employee taxes. Despite multiple warnings from the IRS and advisors, and participation in a Voluntary Disclosure Program, they failed to pay over withheld trust-fund taxes for several years, accumulating debts exceeding five hundred thousand dollars while continuing to pay themselves six-figure salaries.
The court’s reasoning
The court found that the defendants willfully failed to pay over trust-fund taxes in violation of Section seventy-two hundred two of Title twenty-six of the United States Code. The evidence supported the jury’s finding that the defendants were aware of their obligations and chose to use the funds for other purposes, including funding a civil lawsuit, rather than paying the government.
Because we are satisfied to reject each of the defendants’ appellate contentions, we affirm the criminal judgments.
What it means going forward
The decision reinforces that corporate executives cannot evade personal criminal liability for unpaid trust-fund taxes by claiming financial hardship or relying on voluntary disclosure programs without fulfilling the underlying payment obligations.
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