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New Haven Couple Involved in Bankruptcy Fraud Case

Posted on in Bankruptcy
New Haven Couple Involved in Bankruptcy Fraud Case

Jason Sheehan of New Haven, Connecticut, was the sole member of a limited liability company called Infinistaff, LLC that provided temporary workers to employers. In September of 2010, Infinistaff voluntary filed for Chapter 11 bankruptcy with the Connecticut Bankruptcy Court.

Sheehan: False Claims and Representations to the IRS

Sheehan falsely claimed that another company was being paid to process Infinistaff's payroll checks and prepare and file its payroll tax returns and tax payments. Infinistaff also falsely presented to the Internal Revenue Service that the other company was making deposits under its tax identification number. Although Infinistaff did have such an arrangement with this other company for a period of time, the arrangement was terminated at the time Sheehan made these false presentations and claims. In other words, after the arrangement was terminated, Sheehan continued to file operating reports with the Bankruptcy Court as if the arrangement was still in place and claimed that the other company was being paid monthly administrative fees. Sheehan filed these reports to hide the embezzlement of over $1 million from Infinistaff's bankruptcy estate.

Additionally, between 2011 and 2013, Infinistaff failed to report and pay to the Internal Revenue Service over $2.5 million in employment taxes that the company withheld from employment checks. Infinistaff also failed to pay approximately $1.4 million in employer payroll taxes.

Constant: Receiving Payroll Checks and Mortgage Fraud Scheme

Sheehan's wife Glorvina Constant received payroll checks from Infinistaff totaling $354,000 during the bankruptcy proceedings but did not actually perform any work for the company. The couple used this money along with what Sheehan embezzled to travel around the world and purchase a home that cost $650,000.

In 2013, Constant purchased the home using proceeds from a $390,000 mortgage loan from a local bank and approximately $260,000 embezzled by Sheehan.

The Investigation and Court Proceedings

The Sheehan matter was investigated by the Internal Revenue Service's Criminal Investigation Division and the Federal Bureau of Investigation. The United States Trustee Program also assisted the investigation, this Program is component of the Department of Justice that promotes and protects the bankruptcy system by overseeing legal proceedings and enforcing bankruptcy laws.

In October 2014, Sheehan pleaded guilty to:

  • One count of willful failure to collect, account for, and pay taxes
  • One count of embezzlement from a bankruptcy estate
  • One count of making a false declaratory statement under the penalty of perjury in a bankruptcy case
  • One count of conspiracy to commit bankruptcy fraud

Sentencing of the Couple

For engaging in an extensive bankruptcy and tax fraud scheme, Sheehan was sentenced to 37 months of imprisonment, followed by three years of supervised release. Constant was sentenced to one year of probation for participating in her related mortgage fraud scheme.

A hearing will be held later to determine restitution.

If you are considering filing for federal bankruptcy, it is vital that you seek legal guidance. Bankruptcy cases involve complex federal and state laws that can lead to heavy civil and criminal penalties if handled improperly. The attorneys at the Law Offices of Newland & Newland are highly qualified and knowledgeable on bankruptcy issues and are ready to assist you through your bankruptcy process. Contact our office today to schedule your consultation.

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