A Louisiana construction company owner and two key employees are facing federal tax fraud charges for allegedly hiding hundreds of thousands in wages and other compensation.
A federal grand jury in New Orleans on March 26 indicted Matthew Reck, a one-time co-owner of SES Construction Consulting Group and Global Technical Solutions, and employees David Farrell and Dawn Farrell Ruiz, for allegedly defrauding the IRS.
Reck, co-owner of the two construction businesses through the end of 2015 — or roughly at least half of the eight-year period when the alleged tax fraud took place — has also been charged additionally with making false statements to federal agents, according to an announcement by the U.S. Justice Dept.'s Tax Division and the U.S. Attorney’s Office for the Eastern District of Louisiana.
Ruiz and Farrell were also charged with aiding in the preparation of false returns, federal prosecutors said.
An employee answering the phones at SES Construction said Reck, Farrell and Ruiz had hired attorneys and would not be available to comment. The company’s offices are located in Metairie, La.
From 2011 through at least June 2019, Reck and Ruiz, both of St. Tammany Parish, and David Farrell, of Jefferson Parish, deliberately underreported their individual compensation on their tax returns, according to federal officials.
Reck, the co-owner of the construction SES Construction and Global, and Ruiz, the bookkeeper, were also behind the filing of false corporate tax returns.
Reck also allegedly “falsely stated” to IRS investigators “that he had no communications with the accountant for SES and Global regarding the preparation of the companies’ corporate tax returns,” the release noted.
In addition, all three paid some workers at the two companies in cash payments that were “off the books,” while also collecting their own compensation outside the normal payroll process, officials said.
In order to hide his compensation, Reck was paid through RPM Electrical Services, described in the indictment as an “entity he owned to receive income through GTS,” according to federal tax investigators.
An entity called Shark Pool Service played the same role for Farrell in hiding his compensation, according to the indictment.
Emails uncovered by IRS investigators also detailed Reck’s discussions with the company’s accountant, who was unnamed in the indictment and died in 2019.
In one email in 2013, Reck told his accountant he needed “the lowest possible numbers we can get,” while at another point, directing the account to “crush” the construction firm’s income, the indictment states.
“I wrote everything off that wasn’t nailed to the floor, and even some of that,” the accountant told Reck about the tax return he was preparing for the construction firm owner.
“Damn, you are the man!!!” Reck replied, while the firm’s co-owner, not identified, praised the accountant as a “freaking Houdini!!!”
Ruiz mischaracterized compensation as business expenses for travel, lodging and construction materials, the indictment states.
In one case, Reck spent more than $30,000 on a timeshare in the Caribbean, which was noted on the company’s books as a business expense.
Reck, Ruiz and Farrell are set to make their initial appearance April 9 in federal court in New Orleans.
All three face up to five years in prison on the conspiracy to commit tax fraud charge. Additionally, Reck faces up to five years in prison for allegedly making false statements to federal agents, while Ruiz and Farrell face up to three years on charges of aiding in the preparation of a false tax return, prosecutors said.