December 15, 2017

KY Resident Gets Eight Years in Federal Prison for Tax Evasion and Pocketing Comp Premiums

Knoxville, TN – On September 20, 2017, Andrea Rudd, 38, of Powell, Tennessee, was sentenced by the Honorable Thomas A. Varlan, Chief U.S. District Judge, to consecutively serve 60 months for tax evasion and 36 months for mail and wire fraud, for a total of 96 months in federal prison. Upon her release from prison, she will be supervised by U.S. Probation for three years. Rudd was also ordered to pay $15,766,417.32 in restitution to the victims of her offenses, $10,377,785.04 of which will go to the Internal Revenue Service (IRS).

In April 2017, Rudd, pleaded guilty to a two-count information charging her with the above-referenced offenses. This information, on file with U.S. District Court, contains a detailed account of her scheme in committing these crimes.

Rudd was the owner of HR Comp, LLC (HR Comp) in Powell, Tennessee. HR Comp, conducted business through several subsidiaries collectively known as the Professional Employer Organization (PEO) Entities. Operating both independently and in the name of the PEO Entities, HR Comp entered into contracts with client companies to process their payroll. In conjunction with handling the payroll, HR Comp was responsible for collecting and remitting money owed by the companies and their employees for payroll taxes to the IRS. Additionally, HR Comp, both independently and through the PEO Entities, entered into contracts with the client companies to provide worker’s compensation insurance.

Between 2011 and 2015, instead of remitting the money collected from her client companies for payroll taxes to the IRS, Rudd converted the funds for her own personal use. Additionally, client agencies sent money to HR Comp, in exchange for what Rudd and her co-conspirators represented to be worker’s compensation insurance. However, false certificates of insurance were provided to the client companies and the insurance was never purchased.

Investigative agencies involved in this case included IRS-Criminal Investigation and the Federal Bureau of Investigation. Assistant U.S. Attorney Frank Dale represented the United States through court proceedings.

Source: US Attorney

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