According to the U.S. Department of Justice, a Middleton, Mass., a married couple who operates a scrap metal recycling facility has been sentenced in federal court for conspiring to defraud the United States by filing false income tax returns and conspiring to illegally structure cash transactions to evade reporting requirements.
Joseph A. Pingaro Jr. and his wife, Christine Scola, were sentenced by U.S. District Judge Patti Saris. Pingaro was sentenced to four years in prison to be followed by two years of supervised release, and Scola was sentenced to two years probation, of which the first six months are to be served in a halfway house. The defendants also were ordered to pay $900,000 as forfeiture; $50,000 each in criminal fines; $8,000 each in costs of prosecution; and more than $500,000 in back taxes, penalties and interest to the Internal Revenue Service (IRS).
According to court documents, the couple has already paid $500,000 to the IRS and will have paid about $1 million of the forfeiture, fines and costs of prosecution by the end of Feb. 14, 2012.
According to the DOJ, Pingaro and Scola pleaded guilty April 20, 2011, to a conspiracy to defraud the United States by filing false income tax returns and a conspiracy to illegally structure cash transactions to evade reporting requirements.
Pingaro is the sole owner and operator of J&J Metals, a scrap metal facility in Roxbury, Mass., where Scola is the bookkeeper. The defendants transferred millions of dollars from the J&J business bank account into their personal bank account. Scola then withdrew cash from a personal account in a series of withdrawals on consecutive days, each just less than $10,000. Pingaro and Scola used substantial amounts of the cash to make large personal expenditures, both directly and indirectly.
The indirect personal cash expenditures were accomplished by using cash to purchase money orders and bank checks that were used for personal expenditures. Pingaro and Scola also paid third parties to purchase money orders and bank checks, which were then used for the defendants’ personal expenditures. Pingaro then falsely claimed on his income tax returns that almost all of the cash withdrawn had been used for legitimate deductible business expenses for J&J Metals.
According to the DOJ, Pingaro and Scola’s scheme was designed to conceal the actual profits of J&J Metals and evade federal income tax. Scola’s banking activity was designed to further this evasion by avoiding the requirement that financial institutions must file a Currency Transaction Report with the government for each cash transaction exceeding $10,000. Similarly, Pingaro and Scola conspired to avoid U.S. Postal reporting requirements for the purchase of $3,000 or more in money orders from any one location in a single day, by conducting a series of transactions over consecutive business days and in various locations, the DOJ asserts.