A Bel Air couple who ran a now-closed Harford County payroll services firm pocketed at least $2.5 million by funneling client money owed to tax authorities into a personal bank account, according to a criminal indictment filed this week.
Beverly and Kevin Carden, the owners of AccuPay Inc., started siphoning the funds in at least 2006 and did not stop until 2013, according to the indictment, which charges the couple with mail fraud, money laundering and filing false tax returns.
AccuPay closed and filed for Chapter 7 bankruptcy liquidation in 2013, after suits brought by clients, which also accused the firm of repeatedly sending partial payments of federal and state withholding and unemployment taxes.
For example, according to the federal indictment, between January 2011 and Feb. 2013, the Cardens transferred more than $830,000 in client money intended for tax authorities to a personal account, later used to make more than $40,000 in payments on a personal American Express credit card.
The indictment seeks recovery of the $2.5 million estimated lost in the scheme and asks for forfeiture of the couple's home in Bel Air, which Kevin Carden purchased in 1999 and is valued at about $340,000, according to state land records. An auction of the property, scheduled last year, was canceled.
The Cardens also face possible fines and prison time if convicted of the charges.
"We're glad that something is finally happening and they're going to, hopefully, be held responsible for what they did," said David Benfield, founder of DuClaw Brewing Co., which he said used AccuPay for more than 10 years before stumbling upon the scheme in a conversation with a new lawyer. DuClaw filed suit against the firm in 2012.
The Cardens could not be reached for comment Wednesday evening. At a meeting of creditors in 2013, Beverly Carden refused to answer questions about the company and its assets, invoking her Fifth Amendment right to avoid self-incrimination.
Columbia attorney James Vidmar, who represents AccuPay in the bankruptcy, said he was not aware of the indictment until informed of it by a reporter and had not spoken to the Cardens since the summer.
The businesses that used AccuPay remain liable for the most of the money owed to tax authorities, said attorney Stuart Levine, who represented several of the affected clients. More than 150 firms are listed as creditors in the bankruptcy, which is ongoing.
"It's a good thing they got indicted," Levine said. "I suppose it will give all the clients, all the people who lost money some feeling that justice has been done, but it won't get them back their money."
The Cardens hid the scheme from clients by directing IRS correspondence to AccuPay instead of to the firms. When clients confronted AccuPay about problems, the firm claimed they were mistakes due to human error or software, according to the indictment.
In the meantime, the Cardens claimed far less on personal tax returns than their actual income. For example, in 2011, the couple reported joint income of $83,319.
At the time of the bankruptcy, AccuPay claimed just over $500,000 in debts and $326,000 in assets.
Last winter, the U.S. Senate passed legislation to give more protection to businesses victimized by payroll services companies that failed to pay their clients' federal and state taxes or committed other fraudulent acts. The legislation was championed by Maryland Sen. Barbara A. Mikulski in response to the AccuPay fraud.
The bill provided protection to small businesses by requiring the IRS to send dual notification to a business when its address has been changed by a third party. It provided assistance to defrauded businesses that need relief from tax liability by requiring the IRS to give greater consideration to what are known as Executive Tax Administration Offers of Compromise.
A state commission last year also suggested implementing an online system so that clients could check to verify that taxes have been paid.