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July 31, 2014

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Las Vegas payroll-services business owner admits to embezzling more than $3 million from clients

Clients included Culinary Local 226, whose audit raised initial suspicions

A Las Vegas woman is likely headed to federal prison for at least five years after admitting she embezzled more than $3.3 million from small-business customers of her payroll-services firm.

Deborah A. DiFrancesco, 55, pleaded guilty Thursday in U.S. District Court in Las Vegas to one count of tax evasion and three counts of wire fraud.

According to a plea agreement with federal prosecutors, DiFrancesco admitted the following:

As early as 2005 she started embezzling money from clients of Lakes Payroll Inc., the payroll-services agency she began in 2001. During 2009, 2010 and 2011, she evaded payment of $3.8 million in payroll taxes, penalties and interest.

As part of Lakes Payroll services, DiFrancesco would calculate payroll taxes for her clients. She would inform clients of taxes due, and clients would authorize transfer of those amounts to DiFrancesco for payment to tax authorities.

Reports for her clients reflected the true tax liabilities, but DiFrancesco would prepare a second, separate set of reports for the tax agencies that reflected understated tax liabilities. She would pocket the difference.

Between 2005 and 2008, in the first three quarters of the year, she would under-report payroll amounts and under-remit tax payments. She would file the fourth quarter reports months after their due date, which allowed her to use current deposits to pay the prior year’s liabilities, plus any penalties and interest.

DiFrancesco was able to hide the fraud through a combination of a growing client base, a growing tax base associated with growing payrolls, late filings and paying past liabilities with current client deposits. But as the economy slowed, so did Lakes Payroll’s business.

In January 2011, one of the business’ clients, Culinary Local 226, hired an independent CPA to audit the union’s filings with the IRS. The audit uncovered a deficiency for the union of about $673,000 with tax authorities. IRS special agents were notified and began their investigation.

By July 2011, Lakes Payroll had closed. A month later, DiFrancesco confessed to the embezzlement and provided the IRS with spreadsheets identifying clients from whom she embezzled, along with specific amounts of money and years affected.

In all, Lakes Payroll served 66 small businesses. The embezzled funds, authorities said, were used for gambling and personal expenditures.

DiFrancesco has agreed to pay restitution of $3,823,544 to her client victims and must pay the IRS $1,128,505, the amount of personal taxes owed on embezzled funds for 2009, 2010 and 2011.

Under the plea agreement, which is not binding on the sentencing judge, DiFrancesco faces a minimum of 63 months in federal prison. Sentencing is scheduled for Sept. 4.

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  1. Tom D, you are exactly right. Addicted gamblers will go to any length to continue their conduct. Many, many are females, who love the slots. I've had 4 girlfriends in 12 years, all of whom are manic machine players. Had to kick them to the curb after they took 12G from me. Yes, I was the dope, but I've learned my lesson. Keep your money, and forget about the cost of you know what. Rather go to Pahrump or the internet..

  2. I would like to know how she is going to pay restitution of $3,823,544 plus taxes to the IRS if she goes to jail?

  3. "...must pay the IRS $1,128,505, the amount of personal taxes owed on embezzled funds for 2009, 2010 and 2011."

    Seriously?! If you embezzle, those ill-gotten gains are still counted as income? Anything for taxes...

    Total idiot stealing from a Union. They may not be the mafia, but they will keep just as close of an eye on their money and punish anyone who steals from them like they were.

  4. What we need is a lottery so folks like this one will have more ways to feed their habit. Seriously, anyone believe she will pay back a nickel of what she stole? I read about orders of "restitution" all the time and I'll bet a dollar to a doughnut paying back is seldom done. It's a joke! As for Culinary, after losing $673,000, Rooney thinks they keep a "close eye on their money?" Puleeeeze!

  5. Same old, same old. The theft of funds INTENDED for payroll tax deposits is second only to Ponzi scheme fraud. This happens over and over AND OVER again. Business owners NEED TO WATCH employees, contractors, agents, fiduciaries. You don't verify, you get taken.
    p.s. vegaslee and pals: The IRS assessments can be used to confiscate/seize/levy any and all assets she may have socked away--so she can't live well of the proceeds of crime AFTER she gets early release. See, IRS authority is needed in some situations.

  6. About the only thing IRS is gonna do with those spreadsheets is allow "Reasonable Cause" and abate deposit penalties for the businesses defrauded. They still get to pay the employee taxes they thought they had paid.

  7. restitution will be in the form of liquidation of all assets. If she gets out of jail light, she can expect a lifetime of wage garnishment.