Homecare Company President Pleads Guilty To Failure To Pay Employment Tax

SAN JOSE, California—Shane Brightpath Mike pleaded guilty in federal court for failing to pay over employment taxes withheld from the wages of his company’s employees.

Mike, 52, of Whittier, California, was indicted by a federal Grand Jury on June 27, 2019. He was charged with five counts of Failure to Pay Over Employment Tax in violation of 26 U.S.C. § 7202, and two counts of Making and Subscribing a False Return in violation of 26 U.S.C. § 7206(1). On Tuesday, April 30, Mike pleaded guilty to one count of Failure to Pay Over Employment Tax.

In pleading guilty, Mike admitted that he owned and was the president and chief operating officer of Excel Behavioral Services, Inc. (Excel), a business located in Campbell, California, that provided homecare to persons with disabilities. Mike was responsible for withholding Social Security, Medicare and income taxes from his employees’ wages and paying those funds to the IRS.

According to the plea agreement, from the fourth quarter of 2014 through the third quarter of 2015, Mike did not pay any of the withheld taxes to the IRS. For the third quarter of 2014, Mike only paid part of the funds withheld. For these five quarters, Mike did not pay to the IRS more than $1 million in taxes. During that same time, Mike used Excel’s funds to pay his personal expenses.

Mike also admitted to filing false personal income tax returns for tax years 2014 and 2015. On those returns, Mike falsely claimed credit for federal tax withholdings from wages he received from Excel, knowing that such had not been paid over to the IRS. In total, Mike caused a tax loss to the IRS of $1,177,947.

Mike is currently released on bond. His sentencing hearing is scheduled for Sept. 24, 2024, at 9 a.m. in San Jose. The maximum statutory penalty is five years in prison, a fine of $250,000, and restitution of at least $1,177,947. However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Assistant U.S. Attorney Sarah E. Griswold and Assistant Chief Matthew J. Kluge of the Justice Department’s Tax Division are prosecuting the case with the assistance of Lynette Dixon. The prosecution is the result of an investigation by IRS Criminal Investigation.