The Hawaii-based owner of a set of engineering firms that had business deals with the government of Guam and the Federated States of Micronesia was convicted Tuesday by a federal jury in Honolulu of conspiracy to defraud the federal government.
The businessman, Wagdy Guirguis, and his accountant, Michael Higa, were convicted in the conspiracy stemming from tax-related fraud, the U.S. Department of Justice stated.
In addition to the conspiracy conviction, Guirguis also was convicted of:
• three counts of filing false corporate income tax returns;
• one count of failure to file a corporate income tax return;
• three counts of tax evasion;
• one count of “corruptly endeavoring to obstruct and impede the due administration of federal tax laws”; and
• one count of witness tampering.
Higa was convicted of the conspiracy and one count of aiding and assisting in the preparation of a false tax return for one of Guirguis’ business entities.
The convictions arise from a scheme to divert funds from Guirguis’ business entities for his personal benefit and to avoid the payment of federal employment and income taxes, the Justice Department stated.
The Justice Department stated that according to court documents and evidence presented at the trial in Honolulu, Guirguis operated numerous engineering businesses. Higa, a certified public accountant, was the controller of these businesses.
“When the IRS determined Guirguis’ businesses owed over $800,000 in federal employment taxes and assessed an $812,000 penalty, Guirguis and Higa took various steps to place income and assets out of the IRS’ reach,” the Justice Department stated. “For example, Guirguis and Higa used the nominee entity to fraudulently convey a condominium to Guirguis’ wife.”
After an IRS revenue officer began questioning Mrs. Guirguis’ sole ownership of this condominium, Guirguis and Higa instructed a bookkeeper to alter the books and records in an attempt to conceal this transaction from the IRS, the Justice Department stated.
It’s not clear if any of the tax payments in question had to do with Guirguis’ Guam contracts.
Guirguis has longstanding business ties to Guam. In July 2015, Guirguis and Gov. Eddie Calvo signed an agreement that would allow one of Guirguis’ businesses to develop a facility that burns garbage to produce electricity. Their agreement was contingent upon the Guam Legislature’s approval to exempt Guirguis’ business from Guam law that forbids trash-burning incinerators. The Legislature hasn’t acted on the agreement.
The 2015 agreement between Guirguis, as the representative of Guam Resource Recovery Partners, and the Calvo-Tenorio administration was to settle a $20 million claim Guirguis and his company filed against GovGuam for its stalled Guam project.
In November 2017, GRRP sought an order from the Superior Court of Guam to enforce the 2015 agreement and the court-approved mediation between both parties.
However, in July, Attorney General Elizabeth Barrett-Anderson stated there’s no reason to go into mediation on the claim because burning garbage to produce electricity is still illegal on Guam and should not be an issue for mediation.
And GovGuam’s agreement with the proponent of building the waste-to-energy facility in the 1980s is no longer valid, the AG’s office previously stated.
Guirguis also owns GMP Guam which received two contracts in 2013 with the A.B. Won Pat Guam International Airport authority for nearly $2.2 million a year. The contracts were renewable for up to five years.
In the FSM, GMP had a project management contract with the FSM government that was funded with federal funds through the Department of the Interior.
In April 2007, the federal government informed the FSM government that U.S. Compact impact funds could not be used to fund any additional task orders under the contract between the FSM government and GMP Hawaii, in light of a U.S. Office of Inspector General report that questioned the GMP contract because of alleged conflicts of interest and questionable procurement provisions. There also had been concerns raised by the FSM and U.S. governments about the pace, quality and cost of the infrastructure projects’ implementation, an FSM government document states.
Guirguis and Higa face a maximum sentence of five years in prison each on the conspiracy counts. Guirguis faces a maximum sentence of five years on each of the tax evasion counts, three years in prison on each of the counts involving false tax returns and corrupt endeavors, and one year in prison for the count of failure to file a tax return, as well as a period of supervised release, restitution and monetary penalties. Guirguis faces an additional maximum 20-year sentence for witness tampering, the Justice Department stated.
Source: Google News : https://www.postguam.com/news/local/businessman-convicted-of-tax-fraud-has-guam-deals/article_9c55e980-ee16-11e8-b35f-ebbd08814132.html