Federal authorities in Richmond scored a victory last week in a white-collar criminal investigation that uncovered a $20 million tax refund scheme carried out by a former employee of a large financial firm in Northern Virginia.
Sean M. Weaver pleaded guilty in Richmond federal court on Aug. 19 to felony counts of money laundering and mail fraud, and he faces up to 30 years in prison after being caught and admitting to filing false claims for corporate sales and use tax refunds while he worked at Ryan LLC.
Ryan is a tax services firm headquartered in Dallas with offices around the world. Weaver, 33, led a team out of the company’s Arlington, Virginia, office that represented clients identified in court documents only as Client No. 1 and Client No. 2.
Client No. 1 was described as a Fortune 100 company that enlisted Ryan to identify overpayments on sales and use tax in Virginia and apply for refunds. Client No. 2 is described as a defense contractor that retained Ryan for the same services in Texas.
Ryan was paid a percentage fee of any tax recoveries it made for the clients. Weaver, according to court records, would receive bonuses of 5-7 percent of the fees received by Ryan in each instance.
Between October 2011 and December 2014, court records show, Weaver used various methods to manipulate the clients’ data and falsify their invoices to inflate the amount of sales and use taxes they actually paid. That resulted in larger refunds, larger fees for Ryan and thereby, larger bonuses for himself.
“As a result of the scheme, the state taxing authorities issued over $20 million in fraudulent refunds to Ryan LLC clients and Weaver received over $350,000 in personal bonus payments,” the U.S. Attorney’s Office said in a prepared statement.
His crimes defrauded the Virginia Department of Taxation and the Texas Comptroller of Public Accounts. More than $19 million of the fraudulent refunds were issued in Virginia.
The mail fraud charge is stems from Weaver submitting fraudulent documents through the mail. The money laundering charge is a result of his transfer of some of the ill-gotten funds from one account to another.
The government said Ryan voluntarily reported Weaver’s actions and fully cooperated in the investigation. Ryan said its own internal processes uncovered Weaver’s scheme and he was immediately fired.
Weaver had been with Ryan since 2005 and was promoted to principal in 2014. The company said in past releases that he had been a frequent speaker on tax issues.
Weaver, as part of his plea agreement, admitted to acting alone and said no clients or other Ryan employees participated in his scheme.
“At no time was Ryan the subject of any investigation nor were we accused of any wrongdoing,” the company said in a prepared statement. “We deeply regret that the Ryan employee family and several of our key clients have been affected by the wrongdoing of this single individual. Not once in our 24 years have we experienced anything like this.”
Ryan did not say whether it would be forced to return a portion of the fees it received as a result of Weaver’s actions.
The U.S. Attorney’s Office said at last week’s plea hearing that state taxation authorities in Virginia and Texas could eventually look to carry out a clawback that would try to recover some of the refund money that was received by the two corporate clients.
Weaver, an Alexandria resident, was charged via the criminal information process, which does not require an arrest or a grand jury indictment. He faces a maximum of 30 years, but U.S. District Court Judge John Gibney will have the final say. Weaver’s sentencing hearing is scheduled for Dec. 1 in Richmond. He
Weaver also agreed to pay restitution and forfeit $350,000 he pocketed from the scheme, including money already seized by the feds. He was allowed to remain free until sentencing and did not have to pay bond.
Weaver is represented by Texas attorney Greg Westfall, who said he and his client had no comment on the case. Weaver’s Richmond counsel is local attorney Amy Austin.
The case was investigated by the FBI’s Richmond field office, as well as the IRS criminal investigation unit and the U.S. Postal Inspection Service.
Dominick Gerace and Michael Dry are handling the case from the U.S. Attorney’s Richmond office. The U.S. Attorney’s Office declined to comment on the open case.