Feds take over embezzlement probe | AspenTimes.com

Feds take over embezzlement probe

The dozen or so victims of an alleged embezzlement scheme by a Snowmass Village business services firm may catch a break from the Internal Revenue Service.

The IRS and U.S. Attorney’s office Friday took over the investigation of the alleged theft of at least $400,000 from between nine and 14 businesses, many of them restaurants in the town, according to Snowmass Village Police Chief Art Smythe.

The switch could be good for the alleged victims because it will give the IRS a direct and complete picture of what happened to them, Smythe said.

The IRS – which is under congressional pressure to be a kinder, gentler bureaucracy – may use this case as an example of how it can work “positively” with the public.

“I think the IRS, quite frankly, is looking for those opportunities,” said Smythe.

The alleged embezzlement case in Snowmass Village would seem to provide a perfect opportunity. The business services firm is under investigation for failing to pay money owed by clients for federal withholding, federal unemployment and Medicare, according to law enforcement authorities and court documents.

Smythe said the principal owner of the firm is the sole suspect in the case. Police say she acknowledged in an interview that her “dark secret” began in 1996.

The Aspen Times will not name the suspect until she is arrested or charges are filed against her.

Some of her clients became suspicious when they began receiving delinquent tax notices. About a dozen business operators met in November, then some contacted police.

The alleged embezzlement could be particularly tough on the victims because they are liable for interest and penalties in addition to the delinquent tax payments, said Smythe.

Floyd Watkins’ Beaver Run Ranch is among the businesses with tax payments which allegedly weren’t forwarded. Watkins said IRS officials indicated to him the agency might be able to waive the penalties, but not the interest on the late payments. Federal law may prevent the agency from waiving interest fees on late payments.

“I went down to the bank and cut a check for all the interest,” he said. He decided to pay now and discuss relief with the IRS later. The best decision, he said, was not to let the 20 percent interest continue to accrue.

IRS officials couldn’t be reached Monday for comment on the investigation.

Watkins said he can absorb that extra fee, which is on top of the late tax payments, but he wondered how it will affect the other alleged victims.

An affidavit for a search warrant, which was obtained to seize records from the business services firm, identified the Mountain Dragon, Su Casa, La Pinata, Tower, Il Poggio and Krabloonik restaurants as possible victims, as well as Cafe Ink, Stumpf Construction and Beaver Run Ranch. Smythe said that list may not be complete, pending results of the investigation.

Watkins credited Smythe for lobbying the IRS on behalf of the victims.

“I know the police chief is trying to convince them to do anything they can,” Watkins said.

Smythe said he is hopeful the alleged victims’ liability will be limited. Although restitution is theoretically possible in the case, “it doesn’t appear the suspect has the ability to immediately pay,” he said.


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