A Tualatin, Oregon resident has been sentenced to federal prison for his involvement in a payroll tax scheme that defrauded the United States government. David Katz, 48, received a 48-month prison sentence and three years of supervised release. He was also ordered to pay $44,877,254 in restitution to the IRS.
Court documents and trial testimony revealed that from January 2014 through December 2017, Katz conspired with others in the construction industry while serving as president of Check Cash Pacific, Inc. The scheme involved creating sham construction companies to cash over $177 million in payroll checks at various Check Cash Pacific locations. This allowed for under-the-table payments to construction workers without taxes being withheld or reported.
Katz coordinated with construction companies to ensure sufficient cash availability for these transactions. Daily operations saw hundreds of thousands of dollars in payroll checks cashed, and Katz was aware that false identities were used by at least one co-conspirator. As compliance officer, he permitted the filing of numerous false regulatory reports containing fake identities.
For his participation in the scheme, Katz earned a 2% commission on each transaction, totaling more than $4 million. The conspiracy resulted in the IRS losing over $44 million in payroll and income taxes.
On December 2, 2021, a federal grand jury indicted Katz on five counts: one count of conspiracy to defraud the United States and four counts of filing false currency transaction reports with FinCEN. On June 12, 2024, a federal jury found him guilty on all charges.
The case was investigated by IRS Criminal Investigation and prosecuted by Assistant U.S. Attorneys Robert S. Trisotto and Andrew T. Ho for the District of Oregon.