Duane (DAK) Kees, United States Attorney for the Western District of Arkansas, announced today that Eric De Priest, age 47, of Marshall, Arkansas, was sentenced Monday to serve 24 months in federal prison followed by three years of supervised release and ordered to pay a total of $284,736.30 in restitution for his conviction on one felony count of Willful Failure to Pay Over Payroll Taxes. The Honorable P.K. Holmes III presided over the sentencing hearing in the United States District Court in Fort Smith.
According to court records, Eric De Priest (De Priest) is the co-owner of ZacBac Apparel LLC (ZacBac), a limited liability company formed in Arkansas in 2002. ZacBac’s principal place of business is in Marshall, Arkansas. ZacBac manufactures clothing for government agencies such as the United States Postal Service and the military.
The Internal Revenue Code requires employers to pay to the United States of America the employer’s fair share of Federal Insurance Contribution Act taxes, also called FICA and social security taxes, and Medicare taxes owing on wages paid to employees. The Internal Revenue Code also requires employers to withhold from wages of their employees the employees’ share of FICA taxes, Medicare and social security taxes, and income taxes (collectively, “payroll taxes”), to account for payroll taxes, and pay the withheld amounts of payroll taxes over to the United States of America.
Since 2005, De Priest exercised control over ZacBac’s financial transactions including, but not limited to, directing payments to creditors, authorizing payroll and submitting Federal Tax Deposits, and signing and filing payroll tax returns. Specifically, for multiple consecutive quarters from March 2009 through and including December 31, 2015, De Priest signed each of ZacBac’s Employer’s Quarterly Federal Tax Returns (known as a “Form 941”) as the “owner;” meaning, De Priest was the person responsible for collecting, truthfully accounting for, and submitting ZacBac’s payroll taxes to the United States.
Between July 2012 and September 2015, ZacBac withheld over $293,000.00 in trust fund taxes from employees’ wages and failed to pay over to the United States $284,736.30 of this amount. During this same time period, ZacBac diverted more than $247,000 of the trust fund taxes collected from employees’ wages.
Specifically, during the fourth quarter of 2014 that ended December 31, 2014, De Priest deducted and collected from the total taxable wages of ZacBac employees’ federal income taxes and Federal Insurance Contributions Act taxes in the sum of $24,710.25 that he did not then pay into the Treasury of the United States.
De Priest was indicted by a federal grand jury in September 2018 and entered a guilty plea in February 2019.
The investigation was conducted by IRS Criminal Investigations Division. Assistant United States Attorney Kyra Jenner prosecuted the case for the United States.