Criminal – Company executives convicted for not remitting trust-fund taxes

Where two company executives willfully failed to remit money withheld from employee wages to the Treasury department, despite acknowledging an obligation to do so, their convictions were affirmed.

Background

Gregory Gentner and Richard Brasser were each convicted by a jury for five separate felony offenses of failing to pay over to the federal Treasury tax money withheld from employee wages, commonly known as trust-fund taxes.

Indictment

Defendants first argue that it was error for the court to allow the jury to review the indictment during its deliberations. This court disagrees. Allowing the jury to review an indictment during its deliberations is not an error when “the jury is unequivocally instructed that the indictment is not evidence,” and that “the indictment is distributed solely as an aid in following the court’s instructions and the arguments of counsel.”

In this situation, the record is clear that the trial court adhered to those standards. As a threshold matter, as the able trial judge recognized, the indictment was “straightforward,” told “the whole story,” and was “related to the charge.” And critically, the jury was unambiguously instructed that the “indictment is but a formal method of accusing the defendant of a crime. It is not evidence of any kind against the defendant nor does it permit any presumption or inference of guilt.”

This emphatic instruction was actually supported by Gentner’s lawyer — rather than the prosecutors or the district court — who first mentioned that the indictment would be provided to the jury.

Cooperation

Defendants next claim that the terms of the IRS Disclosure Program allow a participating employer to prioritize certain payments while it is resolving tax obligations, and that the jury was not properly instructed about rFactr’s ability (or lack thereof) to pay its withheld and overdue trust-fund taxes when they were due. This contention rests on a false and fatal factual premise.

Defendants were only charged for five specific tax quarters, and each of those quarters post-dated the disclosures they made to the IRS under the Disclosure Program.

Put differently, they were not charged with respect to unpaid taxes in tax quarters while rFactr was in the Disclosure Program. In these circumstances, the challenged willfulness instructions were not an abuse of discretion.

Jury instructions

The defendants maintain that the district court’s willfulness instructions favored the prosecution by omitting a defense theory concerning the alleged insufficiency of rFactr funds, while also instructing the jury that it could consider the defendants’ “discretionary purchases” and “intentional preference of other creditors over the United States.” From there, the defendants contend that those “errors” were compounded because the judge only once read the good faith instruction to the jury, and because that instruction suggested that it applied only to false tax return charges. This court disagrees with each of these contentions.

Rule 33

Defendants finally argue the court failed to “seriously weigh the evidence of [their] extensive cooperation with the IRS.” And they argue that the court erred by collapsing its Rule 33 analysis into its reasons for denying their motions for judgments of acquittal.

This contention — again properly reviewed for abuse of discretion — is also without merit. First of all, the evidence of willfulness in failing to pay over the withheld trust-fund taxes of rFactr that the defendants collected from employees’ wages was overwhelming.

The defendants’ so-called “cooperation” in the Disclosure Program of the IRS is a red herring in that context. They failed to make trust-fund tax payments for multiple quarters after their alleged “cooperation” with the IRS — notwithstanding a barrage of IRS warnings that rFactr had to stay current on its tax obligations.

Although Gentner and Brasser contended that the evidence established that they were trying to make good on the unpaid tax debt to the IRS while keeping the rFactr business afloat, the jury simply found otherwise. Under the evidence credited by the jury, Gentner and Brasser decided to pay themselves first, fund an unrelated civil lawsuit instead of paying over the taxes owed and make payments to non-government creditors, rather than pay to the Treasury the trust-fund taxes.

Affirmed.

United States v. Gentner, Case Nos. 25-4140, 25-4165, May 28, 2026. 4th Cir. (King), from WDNC at Charlotte (Cogburn Jr.). Eric Jason Foster and Juan Chardiet, McLean for Appellants. Jason Poole for Appellee. VLW 026-2-190. 21 pp.

Full-Text Opinion
VLW 026-2-190