The defendants allegedly falsely claimed personal expenses, including vacations, clothing and a yacht
Two owners of a Brooklyn-based plumbing company, Liberty Water & Sewer (Liberty Water), have been charged with tax evasion and conspiracy to commit fraud in the United States. Alexander Figliolia Jr. and Kenneth Sutherland operate Liberty Water as a partnership. Figliolia Jr. and Sutherland were arrested today.
“Business owners, like everyone else, have an obligation to pay their fair share of taxes,” said Breon Peace, U.S. Attorney for the Eastern District of New York. “As alleged, the defendants made millions of dollars repairing water and sewer lines for New York City residents, but instead of dutifully paying the taxes they owed, they misrepresented more than $10 million in personal expenses as business expenses “Their greed has depleted the state treasury of nearly $4 million in tax revenue.”
Between January 2017 and June 2020, the defendants allegedly evaded personal income taxes by writing checks and transferring money from Liberty Water’s bank account to pay personal expenses. Defendants classified these payments of their personal expenses as Liberty Water’s business expenses, thereby reducing Liberty Water’s profits and reducing Defendants’ personal income tax burden.
Figliolia Jr. and Sutherland classified more than $1.75 million in personal credit card expenses, including home renovations, a family trip to Disney World, jewelry and clothing, as business expenses. Figliolia Jr. wrote more than $4 million in checks from Liberty Water’s bank account to a law firm to pay for personal expenses, including the purchase of several properties and a yacht, but classified them as Liberty Water’s business expenses.
Figliolia Jr. and Sutherland received more than $2.8 million in loans for personal life insurance and paid off the loans with Liberty Water funds, allowing them to withdraw that money from the company without paying taxes. In total, Figliolia, Jr. and Sutherland intentionally deducted approximately $10,225,213 from Liberty Water between tax years 2017 and 2019, resulting in the evasion of approximately $3,933,046 in federal taxes.
“The defendants, as charged, evaded taxes on millions of dollars in income from the businesses they operated in New York City by mischaracterizing lavish personal expenses as business expenses in order to reduce their tax burden,” said Jocelyn E. Strauber , Commissioner for New York City Department of Investigation.
The charges are allegations and the defendants are presumed innocent until proven guilty. If convicted, the defendants each face a maximum of five years in prison.