Published: 05:11 p.m., Monday, January 24, 2011

http://www.mysanantonio.com/news/local_news/article/Local-employment-firms-accused-in-66-million-tax-974935.php

An employee leasing services executive was arrested Monday in one of San Antonio's largest-ever tax fraud cases, charged with withholding $66 million that should have gone to the IRS.

Internal Revenue Service and FBI agents arrested Patrick G. Mire, 48, as part of an ongoing investigation that has already produced a 29-count federal indictment unsealed Monday.

He is charged with two counts of mail fraud conspiracy, 23 counts of mail fraud, one count of money laundering conspiracy and three counts of money laundering. He faces up to 20 years in prison on several of the charges.

More arrests are possible in the alleged tax-evasion and money laundering scheme that authorities say started in the mid-1990s. Dressed in a gray suit, a handcuffed Mire was led into federal court Monday and later released on $20,000 unsecured bond following a hearing before U.S. Magistrate Judge Pamela Mathy.

The indictment accuses Mire of having management roles in related professional employer organizations that collected payroll taxes from their clients — usually small businesses — that were never paid to the government, along with fees for workers compensation insurance that was never provided.

The indictment said that from 1995 to 2007, Mire and his co-conspirators, whom are yet to be named, operated professional employer organizations (PEOs) using many different business names to commit the fraud. Mire served as president, general manager, and in other capacities for the interrelated companies, which were all located in the same address in the 12000 block of Network Boulevard in San Antonio.

The scheme even involved setting up a telephone line that gave clients the illusion they were calling an agent for Hartford Underwriters Insurance Co., court documents state. In reality, callers were talking to a machine at the PEOs' offices here, the indictment said.

The government is seeking $66 million from Mire, the purported losses caused by the fraud, but it is unlikely to go after his $700,000 home unless authorities can show it was bought with illegal proceeds.

“We have seen a number of these types of prosecutions nationally involving staff leasing companies,” Assistant U.S. Attorney Tom McHugh said. “When you have the wrong people managing staff leasing companies, this type of conduct is a consequence of that. ... San Antonio stepped into the big time with this one.”

The names of the companies included United Capital Investment Group Inc., Service Professionals Inc., SSI Management Group Inc., Service Professionals, AK of Nevada Inc. Employer Liability Services Inc., Safe Staff Inc., Service Professionals of Texas Inc., Service Professionals of Texas, ServPro of Texas, LLC, United Focus Inc., Centerpoint Outsourcing LLC, Synergy Personnel Inc., and Comal Payroll Plus Inc.

The indictment said that between January 2002 and December 2007, the firms kept a client base of 150 to 200 businesses — mostly mom and pop operations like roofing companies and metal fabricators — and contracted with them to provide things such as payroll services, tax withholding services and workers compensation insurance.

The PEOs managed payroll accounts for more than 5,000 workers representing about $100 million in annual payroll salaries, and were required to collect employment taxes.

“Though withheld from employee paychecks, the employment taxes were not remitted to the United States Department of the Treasury, as the PEOs were obligated to do, and moreover, it was the pattern and practice of the scheme not do so,” the indictment states.

Additionally, Mire and his co-conspirators are alleged to have wrongfully led the client companies to believe they were covered with workers compensation insurance.

Mire and his alleged accomplices fabricated faux Hartford certificates of liability insurance that named a phantom entity call “GAC” as an agent of the policies. Hartford had no knowledge of the scheme.

“What happened in this case, is they're not getting workers compensation insurance, but they're telling clients they got it,” McHugh said the indictment alleges. “They gave (the client companies) bogus certificates of insurance.”

He said the clients of the PEOs would not be on the hook for the tax losses.

Mire and his lawyers, Tylden Shaeffer and John F. Carroll, declined comment after the hearing.