A West Town scrap metal company will plead guilty to federal tax and currency transaction charges following an investigation by the IRS, the federal government announced Tuesday.
Tri State Metal Company was charged with one count of corruptly obstructing and endeavoring to obstruct and impede the IRS, and one count of structuring cash transactions less than $10,000, according to a statement from the U.S. Attorney’s office.
The company, at 1745 W. Fulton St., will plead guilty, though an arraignment date has not yet been set, the statement said.
The charges are the first resulting from an ongoing investigation by the IRS into cash transactions in the local scrap metal industry.
Between September 2008 and September 2012, the company obtained cash by writing checks payable to fictitious people, then using the cash to pay vendors and employee wages, according to the feds.
The company also provided cash for the personal benefit of the deceased owner and president of Tri State, who is not named in the charges.
The transactions were intended to help the company understate vendor, employee and owner incomes on federal tax returns, according to the feds.
The company allegedly cashed more than $6.41 million in checks drawn on its bank account and payable to fictitious people at a currency exchange in Chicago.
Additionally, the company filed false federal corporate income tax returns for 2009, 201, and 2011 that understated gross receipts or sales by more than $2.92 million, according to the statement.
They also failed to report about $840,720 in cash spending for the benefit of the deceased owner, according to the statement.
The charges carry a maximum penalty of $1.5 million in fines.