The CEO of a small Santa Clara manufacturing business was sentenced this week to one year and a day in prison for a decade-long scheme to avoid paying employment taxes.
John Comeau, of Santa Clara, was the CEO of Vivid Inc., a company that provided metal coating services to industrial customers in California and elsewhere, with as many as 40 employees, according to a press release from the U.S. Attorney for the Northern District of California.
Prosecutors said Comeau was responsible for withholding Social Security, Medicare and federal income taxes from the wages of Vivid’s employees, but from early 2010 through 2019, failed to pass along these collections to the federal government.
In the 10-year period ending in 2019, Vivid Inc. paid its employees a total of over $8.8 million in wages. During this period, Comeau not only failed to pass on more than $1.1 million in collected withholding taxes to the Internal Revenue Service, he also caused false quarterly employment tax returns to be filed with the IRS, underreporting Vivid’s wages by more than $5 million.
To conceal his scheme, prosecutors said Comeau caused accurate tax forms to be issued to certain employees. These tax forms reported higher wages than the amounts Vivid had reported to the IRS. Comeau also issued tax forms, such as Wage and Tax Statement, Form W-2, to other Vivid employees that underreported their wages.
Instead of paying his taxes, Comeau used some of the funds to maintain a comfortable lifestyle that included a $3 million home and luxury cars, according to prosecutors.
In addition to the prison sentence, U.S. District Judge P. Casey Pitts ordered Comeau to serve three years of supervised release and pay $1,153,948 in restitution to the IRS.
“The timely payment of these taxes is critical to the functioning of the U.S. government, because, for example, they are the primary source of funding for Social Security and Medicare,” said prosecutors in a statement. “The federal income taxes that are withheld from employees’ wages also account for a significant portion of all federal income taxes collected each year.”
