Whatever the recipe, the dough was a little too sticky. According to the Manhattan District Attorney’s Office and Robert Morgenthau, a Grand Jury has indicted bagel wholesaler Helmer Toro for Gand Larceny, Offering a False Instrument for Filing and violating the labor law through unemployment insurance tax rate manipulation. Prosecutors allege that Mr. Toro, the owner of H & H Bagels, collected, but failed to pay, $369,318.77 withheld from his bagel business employees. This occurred during a six year period from 2003 through his arrest in 2009.
According to the Manhattan District Attorney’s Office:
“The investigation further revealed that during the period of this indictment, [Mr. Toro] filed State and City withholding tax returns under six successive company names. Sporadically, [Mr. Toro] made nominal payments to the New York State Department of Taxation and Finance even though [Mr. Toro] knew he was obligated to turn over all withheld tax. Through shell companies, [Mr. Toro] committed unemployment insurance tax rate manipulation by transferring a large segment of his workforce from an existing business to a new business for the purpose of obtaining a lower unemployment insurance tax rate. Although [Mr. Toro] formed a new company, many of the same workers were being employed at the new company and he was able to therefore obtain an advantageous rate for his unemployment insurance payments to the trust fund operated by the New York State Department of Labor.”
The first prosecution of unemployment insurance tax rate manipulation under the New York State Unemployment Tax Act (also known as the SUTA dumping statute) since it became effective on January 1, 2006, Mr. Morgenthau stated:
“This case is a wake up call to all employers who fail to fulfill their fiduciary obligation to pay over taxes withheld from their employee’s salaries. It also demonstrates how tax evasion hurts our workers when an employer deliberately fails to contribute the appropriate amount into the unemployment insurance trust fund.”
The Grand Jury indicted Mr. Toro on five counts of Grand Larceny in the Second Degree, a class C felony punishable by up to 15 years in prison; one count of Grand Larceny in the Third Degree, a class D felony punishable by up to 7 years in prison; three counts of Offering a False Instrument for Filing in the First Degree, a class E felony punishable by up to 4 years in prison; and two counts of a violation of Labor Law ､581(7)(c)(5) (Unemployment Insurance Tax Rate Manipulation), a class E felony also punishable by up to 4 years in prison.
Whatever the appropriate defense might be in this case, Mr. Toro should implement that defense immediately. The Money Laundering and Tax Crimes Unit, a highly skilled boutique unit of the Manhattan District Attorney’s Office, is represented by prosecutors and investigators with significant experience in these types of schemes. As is the case for many of these alleged crimes, the longer the matter progresses without ascertaining and implementing one’s defense, the more difficult it is to defend them. Crotty Saland PC is a white collar criminal defense firm located in New York. Founded by two former Manhattan prosecutors who served under Robert Morgenthau, Crotty Saland PC has successfully represented clients in alleged frauds involving thefts in the tens of thousands of dollars to alleged tax crimes involving multiple millions of dollars.