A New Jersey trucking company owner was sentenced to two years in federal prison for orchestrating an elaborate $2.3 million tax evasion scheme, according to prosecutors.
Tito Viteri, 41, of Cream Ridge, New Jersey, was sentenced in U.S. District Court in Trenton on Nov. 5, after previously pleading guilty to one count of tax evasion in August 2018. He must serve two years of supervised release once he finishes his prison sentence.
Federal prosecutors alleged that Viteri evaded paying personal and corporate taxes between 2002 and 2011, and again in 2015, while he owned and operated at least 11 trucking companies, known collectively as the Viteri Trucking Companies.
Viteri’s attorney Darren Gelber did not respond to FreightWaves’ request for comment regarding the sentencing.
Viteri evaded paying taxes by “pyramiding companies,” a practice prosecutors claim he used to withhold taxes from his employees, and then intentionally failed to remit the money to the Internal Revenue Service, according to the U.S. Attorney’s Office for the District of New Jersey.
A 2008 IRS audit found that Viteri owed approximately $785,000 in unpaid taxes for one of his businesses and he owed about $315,000 in unpaid personal income taxes. He also paid his home mortgage and purchased jewelry out of his business accounts, but failed to report the personal expenditures on his individual income tax returns, according to court filings.
After the IRS filed liens and notices of intent to seize Viteri’s property to satisfy his outstanding tax debt against one of his companies, Tito Viteri Trucking Inc. (TVT) in 2010, court documents allege he signed a truck lease agreement with a new company, FAV Transportation, which listed him as the president. Between November 2010 and November 2011, TVT sold numerous trucks amounting to around $106,500 to FAV, but no money was actually transferred as a result of these purported sales, prosecutors stated.
Viteri also allegedly designated others as the purported owners of several of his trucking companies in order to “shield business assets while incurring employment tax liabilities.”
Prosecutors claim he also failed to file timely and accurate quarterly federal tax returns by falsely categorizing employees as independent contractors. He also deposited substantial amounts of income into bank accounts set up by others acting on his behalf, including his child’s bank account, and then failed to report the income on his personal tax returns, authorities said.
Viteri also received “unreported kickback income” from an employee. Court documents claim he increased a worker’s salary from $500 to $2,500 per week under the condition that the employee would remit $2,000 of that money back to him over a seven-month period in 2013, but that Viteri failed to report those payments on his individual income tax returns.
Prosecutors stated that Viteri began making payments to the IRS in August 2011, but stopped in December 2013, claiming he was not “bringing enough money home.” However, authorities said he paid approximately $111,000 for a rental property in New Jersey between February 2013 and February 2016. Also in 2016, he purchased a home for $920,000 in his mother’s name “to conceal from the IRS the source of the funds” he used to buy it, according to the complaint.
Viteri is scheduled to surrender to the Bureau of Prisons on Jan. 6, 2020.