A Louisiana man who owns construction and building inspection businesses, along with his brother and sister who were employed by the construction businesses, pleaded guilty today to conspiracy to defraud the IRS.
According to court documents, from 2011 through at least June 2019, Randy A. Farrell Sr., of Jefferson Parish, along with his brother, David Farrell, also of Jefferson Parish, and sister, Dawn Farrell Ruiz, of St. Tammany Parish, conspired to conceal income from the IRS and prevent employment taxes from being deducted from their own and others’ wages. Randy Farrell also conspired with Matthew Reck, who pleaded guilty to conspiring to defraud the IRS on July 7.
According to court documents, Randy Farrell and Reck co-owned and operated two commercial construction companies, SES Construction Consulting Group (SES) and Global Technical Solutions (GTS) through 2015, when Reck sold his interest in the companies to Randy Farrell. Court documents show that Randy Farrell and Reck took funds from SES and GTS without reporting the profits on their tax returns, and they worked with an accountant to conceal these efforts on the companies’ internal books and records. Randy Farrell and Reck also ensured certain SES and GTS employees, including David Farrell and Dawn Farrell Ruiz, were paid outside of the normal payroll process so employment taxes would not be withheld from their paychecks.
Since 2007, Randy Farrell has also co-owned a building inspection business, IECI & Associates LLC (IECI). To help conceal the income he received from IECI, Randy Farrell directed IECI to issue checks payable to nominees in amounts under $10,000 and then cashed the checks, keeping the funds for himself. Randy Farrell also used IECI corporate funds for gambling, and then he concealed his actions by directing these expenditures to be falsely entered into IECI’s corporate records as “materials” expenses or “contract labor” payments. After the IRS executed a search warrant at his business offices and home in September 2017, Randy Farrell filed tax returns that falsely underreported the taxable income he earned from his businesses.
Randy Farrell, David Farrell and Ruiz are scheduled to be sentenced at a later date. Each faces a maximum penalty of five years in prison. Reck is scheduled to be sentenced on Jan. 12, 2022, and also faces a maximum of five years in prison. All defendants face a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and the U.S. Attorney’s Office for the Eastern District of Louisiana made the announcement.
IRS Criminal Investigation is investigating the case.
Trial Attorneys William Montague and Parker Tobin of the Tax Division and Assistant U.S. Attorney Nicholas Moses of the Eastern District of Louisiana are prosecuting the case.