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Posted on Tue, Jul 9, 2013 : 1:02 p.m.

Former Ann Arbor business owners plead guilty to conspiring to commit tax fraud

By Chelsea Hoedl

The former owners of the Ann Arbor-based Ariel Computing Company pleaded guilty on Monday to one count each of conspiracy to defraud the United States.

Anthony Kumar Chaudhuri, 55, and Margaret Ann Chaudhuri, 60, were arraigned in 2011 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.

According to a Department of Justice news release, the former Ann Arbor residents owned a hospital inventory control software company under the name of Ariel Computing and several other nominee names. The business was operated from multiple addresses in Ann Arbor and employed between three and 10 people.

Court documents report that between 1996 and 2008, the Chaudhuris withheld about $888,353 in employment taxes from Ariel Computing employees, but approximately $704,488 of the withheld taxes failed to be paid over to the IRS.

The 2011 indictment reports that W-2 forms were prepared for employees and falsely stated the taxes had been withheld and paid to the IRS.

Instead of paying Federal Insurance Contribution Act taxes, the Chaudhuris spent the money on “business expenses, employee salaries and personal expenses”, according to the 2011 indictment.

The Chaudhuris will face a maximum punishment of five years in prison and a $250,000 fine for the conspiracy charge. A sentencing date has not yet been set.

Chelsea Hoedl is an intern reporter for AnnArbor.com. She can be reached at choedl@mlive.com.

Comments

ritewngmedia

Wed, Jul 10, 2013 : 10:52 a.m.

What about Chaudhuri's health issues where he was publicly asking for donations?

The Picker

Wed, Jul 10, 2013 : 3:59 a.m.

I guess mockery of the IRS is a deletable offense !

drew_blows

Wed, Jul 10, 2013 : 3:34 a.m.

What???? Say it it aint so. Someone in the private sectors commits a crime? I thought only the demonized public employees commit crimes. This is further that the private sector is overpaid and the cause of all our ills.

lefty48197

Wed, Jul 10, 2013 : 1:17 a.m.

No wonder the government is in debt.

Sparty

Wed, Jul 10, 2013 : 4:04 p.m.

We are the Government, @Picker .... All the Tax Payers. And @NotNecessary, 3/4 of a million dollars isn't chump's change and should be repaid towards our Governments debt. Every dollar makes a difference, doesn't it?

The Picker

Wed, Jul 10, 2013 : 3:32 a.m.

The government is not in debt, WE ARE!

notnecessary

Wed, Jul 10, 2013 : 1:37 a.m.

If only 704,000 would cover our governments debt!

David

Tue, Jul 9, 2013 : 10:28 p.m.

Clearly and concisely reported. They with held taxes from their employees and did not pass it on to the IRS. Next case...

justcurious

Tue, Jul 9, 2013 : 10:22 p.m.

1996 and 2008? And they have been operating since then? Michigan must be interested in them as well. White collar crime, probably little time and years to make good on it. Or a deal.

Jaime Magiera

Wed, Jul 10, 2013 : midnight

They weren't spray painting.

PineyWoodsGuy

Tue, Jul 9, 2013 : 9:41 p.m.

If you operate a business in the U.S.A. you are required to obey U.S.A. law, both federal and state. This requirement is taught in Business 101, available at Washtenaw County Community College and many other institutions of higher learning. Alternately, a business person could retain the services of a Certified Public Accountant (C.P.A.). That is how business is conducted in the United States of America!

Jaime Magiera

Tue, Jul 9, 2013 : 9:09 p.m.

Good job Chelsea. This one came out clear and concise.

Sparty

Wed, Jul 10, 2013 : 3:59 p.m.

Pleaded or Pled .... Both may be correct, but isn't pled the more common term ? Who says some pleaded guilty to this and that?

TinyArtist

Wed, Jul 10, 2013 : 1:43 p.m.

Hold on a minute! "...... but approximately $704,488 of the withheld taxes failed to be paid over to the IRS." How about "but did not pay $704,488 of this sum to the IRS, as required by the legal law in these here parts. Mission accomplished.

Jaime Magiera

Tue, Jul 9, 2013 : 9:08 p.m.

Really a shame on so many levels.

JRW

Tue, Jul 9, 2013 : 7:05 p.m.

Throw the book at them.

Nicholas Urfe

Tue, Jul 9, 2013 : 6:16 p.m.

They not only defrauded the government, they defrauded those employees whom they stole from.

Basic Bob

Tue, Jul 9, 2013 : 9:35 p.m.

i doubt that the irs will try to recoup the money from employees, in which case the employees benefited by continuing to be paid even though the company was broke. if i knew my employer was not paying the payroll taxes, i would run out of there fast.

djacks24

Tue, Jul 9, 2013 : 7:06 p.m.

"Instead of paying Federal Insurance Contribution Act taxes, the Chaudhuris spent the money on "business expenses, employee salaries and personal expenses", according to the 2011 indictment." Interesting. So the employees were basically working for free or at a significant wage decrease as what was being withheld from them for payroll taxes was being turned around and handed right back to them as salary. Rob Peter to pay Paul so to speak.

Jay Thomas

Tue, Jul 9, 2013 : 6:05 p.m.

Many people do believe the streets are paved with gold.

KMHall

Tue, Jul 9, 2013 : 6:34 p.m.

Interesting reference.

Widow Wadman

Tue, Jul 9, 2013 : 5:29 p.m.

Interesting report, Chelsea.

Mr. Ed

Tue, Jul 9, 2013 : 5:10 p.m.

Shame on them.