A finance executive already facing civil charges from government regulators is now in deeper trouble, charged with criminal tax evasion.
If convicted, Thomas Y. Jimenez, former CFO of GlobeTel Communications Inc., could be sentenced to as much as three years in prison and one year of supervised release, a fine up to $250,000 and a special assessment in the amount of $300, according to the U.S. attorney for the Southern District of Florida.
Jimenez was alleged by prosecutors to have been responsible for preparing and filing tax forms whenever the telecommunications company’s corporate officers received corporate stock as compensation. But, it was charged, he failed to report to the Internal Revenue Service nearly $2.8 million in stock compensation paid by his company to him and other corporate officers in 2004 and 2005.
Jimenez allegedly used C&M Management Consulting Inc., a nominee entity that was used to make loans to the GlobeTel corporate officers. These loans were to be secured by the corporate officers’ GlobeTel stock. Rather than holding the stock as collateral for the loans, however, C&M sold the stock and distributed the proceeds from the sale to the corporate officers, according to the government.
“Jimenez knew that the stock serving as collateral for the purported loans would be sold and the proceeds distributed to GlobeTel’s corporate officers,” said U.S. Attorney R. Alexander Acosta in a press release.
“Taxpayers cannot create nominee entities as a means of hiding assets or the true nature of transactions,” added Nathan J. Hochman, Assistant Attorney General of the Justice Department’s Tax Division. “The government remains committed to ensuring that taxpayers who try to do so are stopped.”
Attempts by CFO.com to reach Jimenez were unsuccessful.
In May 2008, the Securities and Exchange Commission filed a civil action against GlobeTel and three former officers, including Jimenez, in connection with an alleged scheme to inflate GlobeTel’s revenue and hide millions of dollars of unpaid receivables and liabilities between 2004 and 2006. Jimenez, however, was the only one not to settle those charges at the time. The SEC alleged that GlobeTel recorded $119 million in revenue on the basis of fraudulent invoices created by two people in charge of its wholesale telecommunications business.
Jimenez and another former CFO, Lawrence Lynch, were accused of making, or causing to be made, entries on GlobeTel’s general ledger that improperly offset the receivables associated with those revenues against the liabilities, thereby concealing the revenue fraud from investors. Former CEO Timothy Huff was alleged to have caused GlobeTel to sell $1.6 million worth of its common stock in 2005 in violation of the registration provisions of the federal securities laws.
In his settlement, Lynch agreed to a five-year officer and director bar and to pay a civil penalty in an amount to be determined by the court. Huff agreed to pay a $30,000 civil penalty. In the settlement, neither man admitted to or denied guilt.