Date: Feb. 25, 2025
Contact: newsroom@ci.irs.gov
Richmond, VA — A Chester man was sentenced today to two years in prison for willful failure to account for or pay over employment taxes.
According to court documents, David Neel was the sole owner and operator of several sleep disorder centers in central Virginia including Siesta Health LLC, Healthy Sleep LLC, and Healthy Sleep Partners, LLC. Neel withheld federal trust fund taxes from his employees' wages, but failed to report those withholdings or pay them over to the Internal Revenue Service (IRS), and instead kept the withheld funds for his own personal use. Trust fund taxes consist of withholdings for federal income taxes, and employee contributions to Medicare and Social Security.
Neel did not file an IRS Form 941 (Employer’s Quarterly Federal Tax Return) in the name of any of his sleep disorder companies from at least the first quarter of 2015 through the last quarter of 2020 and did not make any trust fund tax payments to the IRS. Nonetheless, Neel issued W-2s to his employees indicating that he had withheld a total of at least $311,985 in trust fund taxes for this period. Neel also failed to pay over the employer’s share of Medicare and Social Security contributions for those and other quarters, totaling at least $148,558.
The total amount Neel failed to pay to the IRS was at least $460,543.
During the periods Neel failed to pay the required employee withholdings and matching amounts, he had access to significant company funds, which he used to bankroll his lavish personal expenses, including:
- Monthly rent of $5,000 for a 215-acre horse farm and residence (as well as a prior residence), totaling over $220,000;
- $500 to $1,000 per month for work on his personal residence, totaling approximately $30,000;
- Almost $40,000 paid for life insurance;
- Tuition and related educational expenses for the daughter of Neel’s significant other;
- Purchase of a Ford F600 truck.
Erik S. Siebert, U.S. Attorney for the Eastern District of Virginia, and Kareem A. Carter, IRS Criminal Investigation (IRS-CI) Special Agent in Charge of the Washington D.C. Field Office, made the announcement after sentencing by U.S. District Judge Roderick C. Young.
Assistant U.S. Attorney Carla Jordan-Detamore prosecuted the case.
If you suspect a business is not in compliance with taxes owed, you can report online or by mail with IRS Form 3949-A, Information Referral.
IRS-CI is the criminal investigative arm of the IRS, responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money-laundering, public corruption, healthcare fraud, identity theft and more. IRS-CI special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code, obtaining a 90% federal conviction rate. The agency has 20 field offices located across the U.S. and 14 attaché posts abroad.