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Roofing Contractor Admits to Fraud

Monday, January 19, 2015

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A West Virginia roofing and general contractor faces more than 20 years in prison after underreporting employee wages and faking an accident to reap insurance proceeds.

Stephen J. Gretchen, 44, of McMechen, pleaded guilty Wednesday (Jan. 14) to one count of filing a false employees’ quarterly federal tax return and one count of mail fraud, announced U.S. Attorney William J. Ihlenfeld II.

© / Ahlapot

Stephen J. Gretchen admitted to paying his employees off the books.

Gretchen faces up to 23 years in prison and $500,000 in fines in the case, according to the prosecutor.

A local NBC television affiliate reports Gretchen is the owner of A1 Roofs Done Right, based in Wheeling, WV. The company has over 25 years of roofing experience, according to its website.

Underreporting Wages

The business owner told the federal court that he knowingly underreported wages, tips and other compensation paid to his employees, the U.S. Attorney said.

Gretchen confessed he paid certain employees in cash “off the books,” filed quarterly tax returns that did not report these cash payments, and failed to withhold certain taxes on behalf of his employees.

In the second quarter of 2011, Gretchen reported that he paid no wages, tips, or other compensation to his employees. In reality, he had paid about $22,880 to his employees.

“Employers, such as Gretchen, that do not pay employment taxes to the government are not only stealing from the American taxpayers, but could be impacting the future benefits their employees are entitled to for their hard work,” said Thomas J. Kelly, Special Agent in Charge of the Internal Revenue Service-Criminal Investigation, Washington, D.C. Field Office.

“Honest, hardworking citizens should be assured that business owners who are not paying their fair share of taxes will be prosecuted.”

Staged Accident

Gretchen also admitted to the court that he paid one of his employees $500 to deliberately and repeatedly ram a dump truck into his personal 2011 Coachman Freedom Express camping trailer.

Dump truck
© / Bogdanhoda

The contractor paid an employee $500 to repeatedly ram a dump truck into his camping trailer so that he could collect more than $27,000 in insurance.

The staged accident destroyed the trailer for insurance purposes.

He then filed a claim with his insurance provider, falsely reporting that the damage was caused by a hit-and-run accident.

The insurance company sent Gretchen a check cut for $27,776.85 via FedEx in June 2012.

The case was prosecuted by Assistant U.S. Attorney Robert McWilliams. The Internal Revenue Service, U.S. Postal Inspection Service, and the West Virginia Office of the Insurance Commissioner investigated the case.


Tagged categories: Business management; Business matters; Contractors; Criminal acts; Ethics; Fraud; Good Technical Practice; Government; North America; Roofing contractors; Taxes

Comment from Gary Burke, (1/19/2015, 8:51 AM)

Why do people risk ruining there complete life, to gain a few thousand dollars? Was it worth it???

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