Nightclub owner arrested for felony workers’ comp insurance and payroll tax fraud

LOS ANGELES, Calif. – Los Angeles nightclub owner Jonathan DeVeaux, 44, of Cerritos surrendered himself to Los Angeles Superior Court yesterday and was booked on multiple counts of insurance and tax fraud totaling more than $1.1 million.

DeVeaux part-owner and operator of Los Angeles Entertainment Inc. DBA: Savoy Entertainment Center a nightclub in Inglewood allegedly underreported the number of employees working for him to reduce his reportable payroll, so he could illegally reduce his workers’ compensation premium. As a result, he cheated his workers’ compensation insurer, the State Compensation Insurance Fund out of more than $143,000 in premium between 2009 and 2014.

During the same period, DeVeaux allegedly paid many employees in cash, which allowed him to cheat the California Employment Development Department out of more than half a million dollars in payroll taxes.

“DeVeaux’s alleged underground economy operation cheated his patrons, other businesses, the state and his insurer,” said Insurance Commissioner Dave Jones. “These are not victimless crimes. Everyone involved paid for DeVeaux’s crimes, including California taxpayers.”

DeVeaux was also charged with sales tax evasion by underreporting his sales to the California Board of Equalization between 2006 and 2014. An audit of the nightclub’s sales records revealed the business actually underreported sales by $5.4 million. While DeVeaux collected sales tax from nightclub patrons, he allegedly kept the more than half a million dollars and did not remit it to the state.

Detectives from the Department of Insurance worked in tandem with investigators from the Employment Development Department and the Board of Equalization to unravel DeVeaux’s scheme to cheat the system and operate in the underground economy.

If convicted on all counts, DeVeaux faces up to 18 years in prison.

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Source: CA Department of Insurance | 2015 © Copyright Payroll Masters

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