The owner of a Wallingford business was sentenced Wednesday to a year in prison for trying to fool IRS agents who were investigating his company’s finances.
Donald Cariati Jr., 45, of Meriden, had entered a guilty plea in February to one count of obstructing or impeding the due administration of Internal Revenue laws.
U.S. District Judge Michael P. Shea on Wednesday ordered Cariati to serve 12 months and one day of imprisonment, to be followed by one year of supervised release. Shea also ordered Cariati to pay a $95,000 fine, and make restitution of $1,077,049.
Cariati has already paid $1 million toward his tax obligation.
Cariati owns and operates Cariati Developers Inc. at 70 North Plains Industrial Rd., Wallingford. The company provides various services, such as snow removal, excavation, paving, and home construction.
According to the U.S. Attorney’s office, from 2013 to 2017, Cariati paid several employees with company checks, but mischaracterized them as independent contractors or subcontractors to avoid withholding or paying over taxes to the IRS.
Prosecutors said Cariati and his company failed to issue 1099 forms to these “subcontractors,” and informed some people they were being paid off the books. Therefore, their pay wasn’t reported to the IRS.
The IRS launched an audit of the company in 2015. Prosecutors claimed Cariati tried to cover his tracks, such as through fraudulent invoices which aimed to prove to investigators that the people who were paid were in fact subcontractors.
Additionally, the company in 2014 paid for products for Cariati’s cigarette boat. During the audit,
Cariati caused his accountant to provide the IRS with a phony invoice aimed at making it appear that it was a business expense rather than a personal one, according to the government.
Cariati’s defense attorney, Trent Alan LaLima of the firm Santos & LaLima in Hartford, had asked for his client to get a period of home confinement, citing the dangers of the coronavirus to the prison population, and his client’s acceptance of responsibility and lack of a criminal record.
“Mr. Cariati’s conduct is forcing his company to now overpay taxes, a deserved punishment,” LaLima wrote, in a pre-sentencing memorandum. “This Court should consider how his conduct has caused his company financial losses in considering the deterrent effect on him personally, and on other potential offenders in the future. He has taken responsibility for his actions (and) expressed his disappointment in himself.”
Assistant U.S. Attorney Jennifer Laraia had asked the judge to impose a sentence within the calculated guidelines of 24 to 30 months, citing the amount of loss to the IRS and Cariati’s “deceptive” conduct during the audit.
Cariati is currently free on bond and must report to the federal Bureau of Prisons in 90 days.
