|TRENTON – Acting Attorney General John J. Hoffman announced that a Freehold man pleaded guilty today to charges that he defrauded the State of New Jersey out of hundreds of thousands of dollars in tax payments by concealing income from his cleaning business.
Philip R. Kossoy, 49, of Freehold, who owns Absolutely Spotless Home Cleaning Professionals, Inc., a mold remediation business, pleaded guilty to third-degree charges of theft by failure to make required disposition of property received and failure to pay taxes before Superior Court Judge Anthony J. Mellaci Jr. in Monmouth County. Under the plea agreement, Kossoy must pay the state $1.1 million, including $900,000 in unpaid taxes, penalties and interest, plus a $200,000 anti-money laundering penalty. He is forfeiting $424,000 from bank accounts seized by the state, and he paid the remaining $676,000 at the plea hearing. The state will recommend that he be sentenced to 364 days in the county jail.
Deputy Attorney General Peter Gallagher took the guilty plea for the Division of Criminal Justice Financial & Computer Crimes Bureau. Kossoy is scheduled for sentencing on Jan. 3. The charges are the result of an investigation by the Division of Taxation Office of Criminal Investigation and the Division of Criminal Justice.
In pleading guilty, Kossoy admitted that from January 2008 through July 2011, he engaged in a scheme to disguise and conceal income in order to defraud the State of New Jersey out of hundreds of thousands of dollars by underpaying New Jersey Gross Income Tax, State Sales Tax and New Jersey Corporate Business Tax. This included sales taxes he collected but failed to remit to the state.
“Tax fraud is costly to the state and an affront to the honest residents and business operators who pay their fair share,” said Acting Attorney General Hoffman. “We will aggressively prosecute tax cheats, make them pay, and secure convictions that will deter others from these crimes.”
“Working with forensic auditors in the Division of Taxation, we are targeting tax evaders and individuals who steal from the state by obtaining tax refunds through fraud,” said Director Elie Honig of the Division of Criminal Justice. “Our message is this – those who try to cheat the state will face tough criminal penalties, in addition to civil penalties.”
“The result in this case shows what state agencies can achieve when they work together to protect taxpayers and the public from people who want to scam the system,” said State Treasurer Andrew Sidamon-Eristoff.
Kossoy sought to conceal and disguise revenue from his business by taking cash payments from customers and depositing them into multiple personal bank accounts opened by him, rather than his business account. Kossoy also sought to disguise the source of these funds by having customers make checks payable to him personally and not to the business. In addition, the state’s investigation revealed 192 instances of Kossoy altering customer checks by blacking out the memo section of the checks, which referenced the true business purpose of the check. To further conceal income, Kossoy deposited more than $1 million in cash and checks into personal accounts created using another person’s social security number.
The case was investigated for the Division of Taxation Office of Criminal Investigation by Criminal Forensic Auditors Kerry Czymek and Kevin Curry and Supervising Forensic Auditor Debra Lewaine. Detective Anne Hayes, Deputy Attorney General Gallagher and Deputy Attorney General John Nicodemo handled the investigation for the Division of Criminal Justice Financial & Computer Crimes Bureau. Deputy Attorney General Derek Miller handled the state’s criminal forfeiture action. The Division of Consumer Affairs provided valuable assistance.