Middletown Construction Business Owner Admits Tax Evasion

MIDDLETOWN, NJ — The owner of a construction and demolition business located in Leonardo admitted Wednesday in federal court to evading employment and personal income taxes, Acting U.S. Attorney Rachael Honig announced.

Peter Alvarez, 54, who lives in Atlantic Highlands, pleaded guilty Wednesday before Chief U.S. District Judge Freda Wolfson to one count each of employment tax evasion and personal income tax evasion.

From 2011 to 2016, Alvarez owned and operated Mr. Demo, a construction and demolition business located in the Leonardo section of Middletown. As a business owner, he was required to report to the IRS federal withholding taxes and FICA taxes for all of Mr. Demo’s employees and to pay those taxes on a quarterly basis.

According to the charges, which you can read here, Alvarez cashed numerous checks issued by Mr. Demo’s clients and used the resulting cash, in part, to pay Mr. Demo’s employees.

By using cash to pay Mr. Demo’s employees, Alvarez concealed from the IRS his employees’ wages and his failure to report, account for, and pay employment taxes of a total of $177,649.

Alvarez pleaded guilty to evasion of employment taxes of $23,618 for the first quarter of 2016.

From Aug. 1, 2012, to Oct. 23, 2017, Alvarez filed individual federal tax returns for the calendar years 2011 to 2016 in which he falsely and substantially understated Mr. Demo’s total gross receipts by not reporting the numerous checks issued by Mr. Demo’s clients that he cashed, said U.S. attorneys.

For those calendar years, Alvarez owed additional income tax of $432,019 on Mr. Demo’s unreported gross receipts less allowable payroll expenses. He also pleaded guilty to personal evasion of personal income tax of $89,190 for calendar year 2013.

As part of the plea agreement, Alvarez agreed to make full restitution to the IRS of $609,668.

Each charge of tax evasion carries a maximum potential penalty of five years in prison and a maximum $250,000 fine. Sentencing is scheduled for Oct. 28.

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