Accountant gets prison for tax evasion, obstruction

GUILFORD — A Guilford accountant was sentenced Tuesday to more than two years in prison on tax evasion and obstruction charges, according to federal prosecutors.

Louis DeMaio, 70, was sentenced to 30 months in federal prison, followed by one year of supervised release.

DeMaio was an accountant in East Haven from 2010 to 2018, and he owned and ran a temporary employment agency that provided day laborers to construction companies, federal prosecutors said in a release.

As part of the company’s operating procedures, it invoiced construction companies for the cost of labor provided, federal prosecutors said in the release.

The employees were paid by the payments that came from the companies, prosecutors said. The company and DeMaio then gave employees W-2 tax forms that indicated the company had undertaken required federal tax withholding.

Prosecutors said the company and DeMaio failed to withhold taxes and failed to pay those withholdings to the IRS. The company also never filed yearly income tax returns or quarterly 941 tax forms on withholding and payroll taxes owed, prosecutors said.

DeMaio issued hundreds of thousands of dollars in checks from the company made out to himself and to family members who didn’t work for the business, prosecutors said.

From 2010 through 2018, prosecutors said, DeMaio and his family got more than $2.5 million from the company, and DeMaio failed to report any of that on his federal personal income tax returns.

In 2015, the IRS started to look at DeMaio’s business and eventually expanded the review to include a examination of DeMaio’s personal income tax returns.

When IRS investigators questioned DeMaio about failing to report income paid to him by his company, DeMaio “fabricated a story” that most of the payments were loan repayments and gave an agent a false notarized document that he created to support the story, prosecutors said in the release.

Investigators found DeMaio had underreported his income by more than $2.5 million, prosecutors said. The tax loss was $1,132,398.

DeMaio was ordered by the judge to pay full restitution, interest and penalties.

On Aug. 11, 2020, DeMaio pleaded guilty to tax evasion and obstructing and impeding the due administration of Internal Revenue laws.

DeMaio, who is free on a $100,000 bond, was told to report to prison May 12.