NEW YORK (1010 WINS/WCBS 880) – Two Brooklyn business partners were indicted for tax evasion on more than $10 million in income after claiming lavish personal expenses were business-related, the Department of Justice said.
Alexander Figliolia Jr. and Kenneth Sutherland, owners of Liberty Water & Sewer in Sunset Park, were arrested Wednesday morning and charged with tax evasion and conspiracy to defraud the U.S., the DOJ said.
“Business owners like everyone else have an obligation to pay their fair share of taxes,” United States Attorney for the Eastern District of New York Breon Peace said. “As alleged, the defendants made millions of dollars repairing water and sewer lines for New York City residents, but instead of dutifully paying the taxes they owed, they improperly classified more than $10 million of personal expenses as business expenses. Their greed drained the government’s coffers of nearly $4 million in tax revenue.”
Between January 2017 and June 2020, Figliolia, 50, and Sutherland, 62, evaded personal income taxes by using their business financial accounts to issue checks and wire money for personal expenses, the indictment and other court filings allege.
By doing this, Liberty Water’s profits were reduced as were the defendants’ personal income tax responsibilities, the district attorney’s office said.
Home renovations, trips to Disney World, jewelry, clothing and veterinary bills are among the personal expenses the defendants, of Staten Island, allegedly claimed were for business.
“Figliolia and Sutherland were living the lavish life while allegedly failing to report more than ten million dollars in income. The yachts, jewelry and family trips were all paid for with money owed to the federal government. Today’s indictment is a message to all those who choose to evade taxes,” Peace said.
Additionally, the pair allegedly took loans amounting to more than $2.8 million on personal life insurance policies that they repaid with Liberty Water funds. This action allowed the defendants to allegedly get money out of the business with no paid taxes.
According to the DOJ, the defendants allegedly diverted about $10,225,213 from Liberty Water between tax years 2017 and 2019. This amounts to tax evasion approximating $3,933,046.
The maximum sentence if convicted for each defendant is five years imprisonment on each count.