The owner and office manager of an Iowa landscaping contractor that is barred from doing business with the state and federal government have been charged with dodging more than $1 million in federal taxes.
Kevin Alexander, president of K&L Construction, Inc. in Sergeant Bluff, and his daughter, Jenna Alexander-Wilson, who was the company’s office manager and bookkeeper, are both charged with single counts of conspiracy to defraud the United States and tax evasion.
In addition, Alexander-Wilson is charged with four counts of employment tax assessment evasion.
Both have pleaded not guilty to the charges and have been released on personal recognizance bonds. A trial is scheduled for Jan. 3 in U.S. District Court in Sioux City.
The grand jury indictment outlines how the company allegedly started in 2014 to avoid paying employment taxes by filing false and fraudulent Employer’s Quarterly Federal Tax Returns.
The IRS issued a $1.2 million tax levy in 2017 on $3.85 million in wages, but no payments on the levy have been made.
During the IRS collection efforts, the indictment alleges that Alexander and Wilson provided the agency with altered bank statements and copies of checks with modified account holder, account number and routing information. It also alleges that assets were transferred to Circle A Construction, another company owned in part by Alexander.
Alexander sold Circle A for $1,000 in 2016 to a sole shareholder who is identified in the indictment as Insider 2.
The indictment also notes previous fraudulent activity from K&L Construction, which submitted $807,767 in false invoices for a federally funded highway contract in 2016.
The state responded to the fraud by disqualifying K&L from bidding on contractor and subcontractor contracts and extended the disqualification in 2017 for each individual and for each entity the Alexanders have an ownership interest in.
In 2017, Alexander-Wilson pleaded guilty to making false statements in connection with the highway project. She was sentenced to time served, and fined $34,432.
As a result of Alexander-Wilson’s plea, the Federal Highway Administration in 2017 suspended Alexander, Alexander-Wilson, and K&L from federal contracting. In 2020, the suspension became a retroactive disbarment.
According to the indictment, Alexander-Wilson and Alexander created and filed various corporate documents between 2016 and 2020 that made it appear that Insider 2 was the owner of Circle A when Alexander was the true owner.
According to the indictment, Alexander-Wilson allegedly used a fictitious name, Danielle Cutler, to conceal her role in Circle A, which continued to bid on FHA-funded projects and generated profits for K&L. The indictment alleges that in 2018 Wilson-Alexander submitted falsified certificates of liability insurance, bid under the name of Circle A for a highway project in Nebraska, and represented to the U.S. Department of Transportation Office of the Inspector General that Alexander was nothing more than a “truck foreman” for Circle A.
By making it appear that their company made less money than it did, the indictment estimates that Alexander and Alexander-Wilson created an estimated tax loss of $466,377 between 2015 and 2018.
Calls to attorneys representing Alexander-Wilson and Alexander were not returned.
Tony Morfitt, a spokesperson for the US Attorney’s Office in the Northern District of Iowa, also declined to comment.
“Because of the current status of the case, my office is not able to provide a comment on the charges,” he said.
The Iowa Dept. of Transportation also did not respond to calls or emails.
In 2016, ENR reported on how K&L defrauded the federal government by billing for more work or material than had actually been provided by using White-Out to alter material supplier invoices, K&L gave itself an interest-free loan.