NEBRASKA TAX CHEAT SENTENCED TO PRISON

Manager Of Popular “Barry’S Bar And Grill” Failed To Pay Employment Taxes

WASHINGTON, D.C. - Eileen J. O’Connor, Assistant Attorney General for the Tax Division, Department of Justice; and Nancy Jardini, Chief, IRS Criminal Investigation, announced today that at the federal courthouse in Omaha, Nebraska, U.S. District Judge Thomas M. Shanahan sentenced Michael Dane Webb to serve five months in federal prison, followed by five months of home detention. Thereafter, Mr. Webb will be under court supervision for an additional three years. On February 27, 2004, Mr. Webb pled guilty to a felony charge of willfully failing to account for and pay over employment taxes (26 U.S.C. §7202).

“The Department of Justice is working aggressively with the IRS to identify and prosecute unscrupulous employers who misuse the money that they withhold from their employees’ paychecks,” said Assistant Attorney General Eileen J. O’Connor. “Employers are required to withhold Social Security, Medicare and income taxes from their employees’ pay, keep the proceeds in trust for payment to the United States, and file employment tax returns correctly reporting those taxes.”

“Employers who disregard their legal responsibility to file and pay over payroll taxes are cheating their employees, as well as the government,” said Nancy Jardini, Chief, IRS Criminal Investigation. “Many years from now, when their employees retire and apply for social security benefits, the employees may receive reduced social security benefits. The bottom line is, the funds end up lining the pockets of those employers who collect the money and keep it. We will continue to aggressively identify and investigate these types of financial tax crimes.”

Mr. Webb admitted in his plea agreement that he conducted business through Barry Good, Inc., doing business as Barry’s Bar and Grill in Lincoln, Nebraska. He also admitted he had withheld from his employees’ wages, Social Security, Medicare, and income taxes, but did not report, deposit or pay over those withholdings during 1996, 1997 and 1998. The government also alleged that Mr. Webb had conducted the same type of scheme at another bar, Barry’s West, located in Scottsbluff, Nebraska. Mr. Webb admitted he had between 60 and 70 employees during those years. His three-year scheme allowed him to accumulate from their wages approximately $120,000 that he was required to pay to the IRS on behalf of his employees. Instead, he kept it for his own use.

Assistant Attorney General O’Connor thanked Tax Division Trial Attorneys Brian D. Bailey and Charles A. O’Reilly, who prosecuted the case. She also thanked the special agents of the Internal Revenue Service whose assistance was essential to the successful investigation and prosecution of the case.

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