A former Massachusetts home builder, Kent Pecoy, pleaded guilty to conspiring to defraud the United States and creating false documents to aid a client in obtaining a mortgage. Pecoy was the owner and operator of Kent Pecoy & Sons, Construction Inc., a commercial and luxury home construction company based in West Springfield.
Court documents and statements made in court reveal that from 2009 through 2016, Pecoy conspired with others to hide income from the IRS by dealing in cash. Specifically, he received $1,116,900 in cash payments from Kevin Kennedy, who was sentenced to prison last month for tax crimes. These payments were for the purchase and construction of custom-built homes in East Longmeadow and on Cape Cod.
Pecoy did not deposit most of this cash into his business's bank accounts but instead distributed it directly to vendors and subcontractors. He used approximately $135,700 of that cash to pay subcontractors under the table for work performed at the Cape Cod home. Furthermore, Pecoy created separate ledgers documenting Kennedy’s cash payments and maintained false contracts and cover sheets. He also made false entries in his company’s accounting system to conceal these cash transactions.
For those payments that he did deposit into bank accounts, Pecoy ensured they were less than $10,000 each time to avoid triggering currency transaction reports.
In January 2010, for an East Longmeadow home project, Kennedy and Pecoy created two contracts - one reflecting the agreed-upon purchase price and another with a deflated purchase price. The latter contract listed a purchase price that was $160,000 lower than the actual contract price. This reduced amount represented what Kennedy had paid Pecoy in cash as a down payment for the home. Kennedy then submitted this deflated home purchase contract to his bank as part of his mortgage application process.
In total, Pecoy's actions resulted in a loss to the IRS of more than $250,000. He also obstructed an IRS investigation by failing to provide all subpoenaed documents.
Pecoy is scheduled for sentencing on August 20. The charges against him carry a maximum penalty of five years in prison for conspiring to defraud the United States and 30 years in prison for making a false statement to a bank. In addition, he faces potential supervised release, restitution, and monetary penalties. A federal district court judge will determine his sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
The announcement was made by Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney Joshua S. Levy for the District of Massachusetts. The case is currently under investigation by the IRS Criminal Investigation division, with Assistant Chief Eric B. Powers of the Tax Division and Assistant U.S. Attorney Neil Desroches prosecuting.