A 43-year-old Hankamer, Texas woman has been sentenced to federal prison for income tax violations in the Eastern District of Texas, announced U.S. Attorney John M. Bales today.
Holly D. Kirkwood pleaded guilty on Feb. 11, 2016 to filing a false income tax return and was sentenced to 30 months in federal prison today by U.S. District Judge Marcia A. Crone. Kirkwood was also ordered to pay restitution in the amount of $474,532 in back taxes.
According to information presented in court, beginning around January 2008 and continuing to 2011, Kirkwood was the office manager and bookkeeper for Rustbusters, a painting and sandblasting corporation, based in Humble, Texas. As part of her job responsibilities Kirkwood submitted forms to Employers One Source Group (EOSG), an employee staff leasing and payroll company, for reimbursement of expenses incurred by employees of Rustbusters. EOSG prepared and issued reimbursement checks to employees for expenses incurred by the employees of Rustbusters. In 2008, Kirkwood began submitting reimbursement forms to EOSG for the purchase of sand and grit purportedly made by her and used by the company in its operations, when in fact no such purchases had been made. This fraudulent reimbursement scheme continued through early 2011during which she received numerous reimbursement checks totaling $567,332.00 in 2008, $713,474.00 in 2009, and $671,014.00 in 2010. Because of the large increase in Rustbuster’s business during peak oil drilling years the excess reimbursements were not discovered until a forensic audit was conducted by a CPA firm. Kirkwood failed to report on her individual income tax returns for 2008 -2010 the additional unauthorized reimbursements monies received during those years instead reporting only her normal W-2 wages. Her tax returns were prepared in Orange, Texas. The additional tax due and owing is $249,766 in 2009, $219,971 in 2010, and $4,796 in 2011, totaling $474,532.
“The defendant stole hundreds of thousands of dollars from her employer and failed to report the proceeds on her tax return and she is now going to pay the price,” said Rick Goss, Special Agent in Charge, IRS-Criminal Investigation-Houston Field Office. “Even stolen money is taxable and greed of this nature can’t go unpunished.”
This case was investigated by the Internal Revenue Service, Criminal Investigations Division and prosecuted by Assistant U.S. Attorney Robert L. Rawls.