Two executives from a health informatics company based in San Jose pleaded guilty to skirting federal employment tax laws. According to court documents, Lalo Valdez and Matthew Olson failed to remit withheld employment taxes totaling millions to the IRS. The taxes were earmarked for critical government functions like Social Security and Medicare, which rely heavily on these quarterly payments.
Valdez served as CEO, and Olson acted as CFO, controlled company operations, and oversaw financial records at the San Jose firm. They were charged with withholding taxes from their employees' wages from the first quarter of 2017 until the second quarter of 2021, and yet they willfully neglected to pay these over to the IRS. Instead, the duo spent the funds on personal luxuries, including memberships at country clubs and tickets to San Jose Sharks games, the Justice Department reported.
In addition to the charges related to the tech company, Olson had similar responsibilities at a day spa in Saratoga, where he also withheld and failed to pay taxes. Olson's actions resulted in more than $2.1 million in tax losses to the IRS, while Valdez contributed to nearly $1.5 million in unremitted taxes.
The guilty pleas result in a potential maximum sentence of five years' imprisonment for both men. They are scheduled for sentencing on October 20. A federal district court judge will impose their sentences, considering the U.S. Sentencing Guidelines, among other factors. Restitution and monetary penalties are also on the table for Valdez and Olson.
The IRS Criminal Investigation, the Tax Division, and the Northern District of California Attorney’s Office had a hand in prosecuting the case. Acting Deputy Assistant Attorney General Karen E. Kelly of the Justice Department’s Tax Division and Acting U.S. Attorney Patrick D. Robbins for the Northern District of California announced the development. Trial Attorney Mahana Weidler of the Tax Division and Assistant U.S. Attorney Kristina Green for the Northern District of California represent the prosecution team.
