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Contractor avoids jail in €2.5m fraud case

Contractor avoids jail in €2.5m fraud case

AN Ennis building contractor who was “ill prepared” to be in charge of a company employing hundreds of people, has escaped jail but been fined €10,000, having committed “significant Revenue fraud of €2.594 million”.

Patrick Mahony, 49, with an address at Craglea, Woodstock was sentenced at Ennis Circuit Criminal Court on Tuesday, having pleaded guilty to five charges out of a total of 16 under the Taxes Consolidation Act 1997.

The accused was a former director of Boxform Limited, now in liquidation, a company that had a turnover in excess of €8m at its peak and employed up to 350 people nationwide.

The outstanding tax liability across the 16 charges, the court outlined, came to €2,594,446.
The five charges are that Mahony, as a director of Boxform Limited, “knowingly or wilfully” delivered incorrect VAT returns to the Collector General in connection with the VAT periods of January/February 2006, November/December 2006 and November/December 2007.

He also admitted to failing to file a true and correct return in the prescribed form for the period January/February 2008 and to failing to remit income tax, pay-related social insurance and levies for the 2006 income tax year.

Judge Gerald Keys pointed out that Mahony’s company employed between 150 and 350 and had a turnover of €8m, which he described as a “lucrative turnover”.

Issues with his tax affairs came to light when, in 2008, employees had difficulty claiming social welfare benefits. As a result, an investigation was launched by Revenue and it turned up other discrepancies in the years from 2006 to 2008.

Judge Keys said it was found that Mahony had “deliberately understated the VAT, PRSI and PAYE values” in his returns and revealed underpayments of €848,563 in PRSI and PAYE and €375,776 in VAT, giving a total of €1,224,339.

The court outlined that in 12 cases, Mahony had filed incorrect VAT returns and filed none in 2008. The company then went into liquidation, with the liquidator taking action against the directors, barring Mahony and his wife, who was also a director, from being directors of a company for five years.

Judge Keys said Mahony had left school at 18 and was a carpenter by trade and had worked in the USA and Britain. He has four children and supports his family.

He noted that the accused man’s family home is in negative equity and that he is also the owner of six properties, all which are now owned by banks and also in negative equity. He accepted that since taking up work in the UK in 2010, Mahony’s tax affairs are in order there and that he co-operated with Revenue in their investigation and returned amended P35 forms.
Judge Keys said Mahony had a “limited business ability” and was “ill prepared to be in charge of a company of that size”.

Nevertheless, he said this was a “deliberate act of fraud and cannot be excused”.

What went in his favour was that he made a voluntary disclosure, handed over all his books to the liquidator and was of previous good character.

“There was no outstanding money owed to employees and none were out of pocket as a result,” he said.
Judge Keys said he was advised that these acts were carried out as a result of “financial strain in 2007 and not out of greed”. He noted no recompense arrangements had been made.

In delivering his sentence, Judge Keys said he was of the view that punishment should not be the main criteria. However, he noted this was a “serious crime”.

“If everyone behaved the way you did, we would have no sustainable economy,” he said. Therefore, he said the message had to go out that if one conducts their business in the way Mahony did, they will receive a custodial sentence.

“There has been significant Revenue fraud of €2,594,446 in total over two years,” he said.
Judge Keys said the defendant’s co-operation was significant and “an important mitigating factor”, as this could have been a very costly trial to prosecute.

He said the aggravating factor in the case was that there was “a deliberate reduction in figures for VAT, PRSI and PAYE” made by Mahony.

He said the barring of Mahony as a director for five years could be considered a punishment in itself.

“He has been held personally liable from the revenue loss and his family home is in negative equity,” Judge Keys said. He explained that to jail Mahony, who is now working in the UK to support his family, would put his family home at risk.

“This was not an out and out fraud,” he said, adding that it was not done out of greed. It was carried out at a time when there was “a cash-flow difficulty” in his business and at a time when he was having difficulty being paid.

Addressing Mahony, Judge Keys said, “You provided employment for a large number of employees generating money for the Exchequer. To send you to prison would deprive your family of income and they would have to rely on the State for financial support. I’m sure you are not the only business man who has left the Exchequer short of money.”

He said he could not describe Mahony “as a white-collar businessman” as he said he had no doubt that he “had little business expertise”.

“The amount of money lost by the Exchequer is tremendous,” Judge Keys continued.

He highlighted again that the defendant employed a lot of people and he said to jail him would have the effect of stopping his family’s only source of income, which could result in the loss of the family home.

“I’m conscious of the effect on his family”, he said and in those circumstances, he imposed a three-year concurrent sentence on each of the five charges and ordered that the sentence be suspended for a period of three years, on the condition that Mahony enter a bond to keep the peace and be of good behaviour for a period of three years.

It is also a condition of the bond that he remain in employment.

He also imposed a €10,000 fine and, in doing so, Judge Keys commented, “I am conscious that you are held personally liable for the debts of the company [and Revenue debts] but it would be remiss of this court not to impose a fine”.

Defence counsel indicated that the sum could be paid within 12 months.

By Carol Byrne

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