Former Owner of Kankakee Payroll Processing Company Pleads Guilty to Fraud

June 30, 2010 - URBANA, IL—The former owner of Premier Data Solutions, Gary A. Gerberding, waived indictment today and pled guilty to defrauding former clients of his payroll processing company. Gerberding appeared today before U.S. Magistrate Judge David G. Bernthal. Sentencing is scheduled on Oct. 8, 2010, before Chief U.S. District Judge Michael P. McCuskey.

During today’s court hearing and in court documents, Gerberding, 58, of Kankakee, Illinois, admitted that from January 2007 to April 2008, he failed to pay payroll taxes due to the Internal Revenue Service and the Illinois Department of Revenue on behalf of clients who had contracted with Premier Data Solutions to process weekly and bi-weekly payrolls. As part of their arrangement, clients provided Premier Data Solutions with the funds necessary to cover both the payroll and payroll taxes. Premier Data Solutions then provided clients with a payroll package consisting of several reports and payroll checks.

Gerberding admitted that he manipulated the payment of clients’ payroll tax liabilities using one client’s payroll tax monies to pay another client’s outstanding payroll tax liabilities. Gerberding further admitted that he provided false check reconciliation journals to clients to cover the fraud. The journals falsely indicated that Premier Data Solutions was remitting payroll taxes to the IRS and the Illinois Department of Revenue, when in fact, it was not. The total estimated amount of loss resulting from Gerberding’s fraudulent scheme is $2,370,142.

The investigation was conducted by the Internal Revenue Service-Criminal Investigation Division, the U.S. Postal Inspection Service, and the Federal Bureau of Investigation. The case is being prosecuted by Assistant U.S. Attorney Colin S. Bruce.

Each count of wire fraud (two counts) carries a maximum statutory penalty of 20 years in prison and a fine of $250,000; for each count of failure to pay over tax (three counts) the penalty is up to five years in prison and a fine of $250,000. According to the plea agreement, the parties have agreed that the amount of restitution owed is $1,670,142.