Former Ann Arbor business owners arraigned on charges of failing to pay taxes
A couple accused of failing to pay more than $600,000 in employment taxes to the IRS while operating an Ann Arbor-based software company were arraigned Wednesday in federal court in Detroit on numerous criminal charges.
Anthony Kumar Chaudhuri, 55, and Margaret Ann Chaudhuri, 60, of Naples, Fla., were each arraigned on 11 counts of failing to pay employment taxes and one count each of conspiracy to defraud the United States and obstructing Internal Revenue Service laws.
The Chaudhuris, who owned Ariel Computing, a hospital inventory control software company, were indicted earlier this month by a federal grand jury. Both pleaded not guilty Wednesday and were released by U.S. Magistrate Judge R. Steven Whalen on $10,000 unsecured bonds.
According to the indictment, the couple's company had several offices in Ann Arbor from 1994 to 2008, including one on South Industrial Parkway, employing between 3 and 10 people. For roughly 12 years, beginning in March of 1996, the couple withheld more than $880,000 in employment taxes, but failed to pay more than $600,000 of that money to the IRS, the indictment alleges.
Instead of paying the money to the IRS as required by law, the indictment says the couple used it for "business expenses, employee salaries and personal expenses." As part of the scheme, the indictment says W-2 forms were prepared for employees that falsely reported the taxes had been withheld and paid to the IRS.
According to a U.S. Department of Justice news release on Wednesday, the couple used other names for their business, including ADI. The Chaudhuris generated more than $2 million between 2005 and 2007 under that name, the release says, but failed to file income tax returns reporting that income.
In addition, the indictment says Anthony Chaudhuri earned more than $985,000 in income from Ariel Computing between 2004 and 2007, but failed to pay any federal income taxes.
The couple was charged after an investigation by IRS Criminal Investigation special agents.
The conspiracy charge and each count of failing to pay employment taxes is punishable upon conviction by a maximum of five years in prison and up to a $250,000 fine. Obstructing Internal Revenue Service laws is punishable upon conviction by a maximum of three years in prison and up to a $250,000 fine.
Lee Higgins covers crime and courts for AnnArbor.com. He can be reached by phone at (734) 623-2527 and email at leehiggins@annarbor.com.
Comments
The Picker
Sat, Sep 3, 2011 : 1:57 p.m.
Why should a business have to do the governments dirty work anyway? Let them collect ttheir own taxes, garnishments, judgements ect. Its time consuming and expensive and doesn't contribute anything toward the business. It puts the business owner in a dangerous spot when the employee has a beef with the deductions and wants to settle things. Simplify the tax system and leave us alone.
EyeHeartA2
Thu, Sep 1, 2011 : 6:03 p.m.
Did these guys go to the General Electric School or Tax avoidance?
RJA
Thu, Sep 1, 2011 : 4:47 p.m.
I have always heard, the only two things a person MUST do in life is pay taxes and die.
Chris 8 - YPSI PRIDE
Thu, Sep 1, 2011 : 2:55 p.m.
How in this day and age and including 1995 until 2007 could they have allegedly committed such a fraud. If a w-2 form was issued at the end of the year and the employees filed tax returns, would that not be a red flag on the spot? The IRS must be a complete mess if they didn't catch this the first year it begun happening. When a return is filed, wouldn't the IRS detect immediately that the W-2 form filed does not match with the amount of money received from the employer therefore triggering an audit? There is more to this story then meets the eye. I have a gut feeling there will be further allegations against employees, resulting in more federal charges. Something about this does not make sense to me at all, unless this story is half-bagged like 90 percent of the others I read here.
Tom Teague
Thu, Sep 1, 2011 : 2:29 p.m.
In retrospect, the illegality of it all was the only flaw in an otherwise brilliant plan to direct cash to the bottom line.
Marilyn Wilkie
Thu, Sep 1, 2011 : 1:53 p.m.
I wonder why the Feds let this to go on for 12 years. I would imagine they didn't pay the State either.
snapshot
Fri, Sep 2, 2011 : 1 a.m.
Because they concentrate on veiled busy work in immigration, drug enforcement, terroist activity, and a bunch of other inconsequential issues while medi cal, tax, and securities fraud cost taxpayers 100's of billions of dollars. We need to start holding our government accountable to the citizens, instead of special interest.