Earlier this afternoon, Manhattan District Attorney Robert Morgenthau announced the arrest and indictment of Helmer Toro, the owner of H&H Bagels, for stealing withholding taxes and evading unemployment insurance tax in connection with his wholesale and retail business. Toro, 59, was born in Puerto Rico and opened his store at Broadway and 80th Street in 1972. He’s scheduled to be arraigned in State Supreme Court today. This is the latest in a string of tax-related problems for the bakery: back in May, both of its locations were closed temporarily by the tax man. The full release from the DA’s office is after the jump.
Manhattan District Attorney Robert M. Morgenthau announced the indictment and arrest of the owner of H & H Bagels for stealing withholding taxes and evading unemployment insurance tax in connection with his wholesale and retail bagel business.
The defendant, HELMER TORO, 59, has been indicted on charges of grand larceny, offering a false instrument for filing and violating the labor law through unemployment insurance tax rate manipulation. The crimes charged in the indictment occurred between July 31, 2003 and April 24, 2009.
H & H Bagels operates a retail business at its original location on 2239 Broadway on the West side near 80th Street and its flagship baking location at 639 West 46th Street near 12th Avenue. The investigation leading to today’s indictment and arrest revealed that TORO collected but failed to pay $369,318.77 withheld from the payroll of the employees of his bagel business.
The investigation further revealed that during the period of this indictment, TORO filed State and City withholding tax returns under six successive company names. Sporadically, TORO made nominal payments to the New York State Department of Taxation and Finance even though TORO knew he was obligated to turn over all withheld tax. Through shell companies, TORO committed unemployment insurance tax rate manipulation by transferring a large segment of his workforce from an existing business to a new business for the purpose of obtaining a lower unemployment insurance tax rate. Although TORO formed a new company, many of the same workers were being employed at the new company and he was able to therefore obtain an advantageous rate for his unemployment insurance payments to the trust fund operated by the New York State Department of Labor.
TORO has been indicted on five counts of Grand Larceny in the Second Degree, a class C felony; one count of Grand Larceny in the Third Degree, a class D felony; three counts of Offering a False Instrument for Filing in the First Degree, a class E felony; and two counts of a violation of Labor Law §581(7)(c)(5) (Unemployment Insurance Tax Rate Manipulation), a class E felony.
A class C felony is punishable by up to 5 to 15 years, a class D felony is punishable by up to 2 1/3 to 7 years, and a class E felony is punishable by up to 1 1/3 to 4 years, all in prison.
TORO is scheduled to be arraigned today in State Supreme Court, Part 59.
Mr. Morgenthau said, “This case is a wake up call to all employers who fail to fulfill their fiduciary obligation to pay over taxes withheld from their employee’s salaries. It also demonstrates how tax evasion hurts our workers when an employer deliberately fails to contribute the appropriate amount into the unemployment insurance trust fund.”
Today’s indictment marks the first prosecution of unemployment insurance tax rate manipulation under the New York State Unemployment Tax Act (also known as the SUTA dumping statute) since it became effective on January 1, 2006, according to the Labor Department. In the past three years, as the Labor Department enhanced its detection program, it found 354 employers who had failed to report transfers of employees properly. These employers collectively owed in excess of $20 million in taxes.
Mr. Morgenthau thanked Acting Commissioner Jamie Woodward of the New York State Department of Taxation and Finance, and her staff in the Criminal Investigations Division and the High Volume Enforcement Unit, particularly Investigator George Bean and Auditor Mukaila Rabiu, and Commissioner M. Patricia Smith of the New York State Department of Labor and her staff.
Assistant District Attorneys Maurice Mathis and Gilda Mariani, Chief of the Money Laundering and Tax Crimes Unit, are handling the prosecution of this case with the assistance of several of the Unit’s staff. The District Attorney’s Office (NYPD) Office Squad assisted in the investigation, including Detective Robert Mistretta, under the supervision of Captain Ronald Haas.