June 18, 2014
A former Charlottesville businessman entered a guilty plea Wednesday to a federal charge of tax evasion.
James Kirk Baldi, 50, faces up to five years in prison and or a fine of up to $10,000.
According to evidence presented at today's guilty plea hearing by Assistant United States Attorney Ronald M. Huber, Baldi's accounting firm, which operated under a variety of names including CSGI, LLC and/or Virginia Payroll Tax, LLC, provided payroll services and conducted banking transactions from clients' accounts in order to meet payroll obligations. Those bank transactions included making electronic transfers between the clients' bank accounts and bank accounts controlled by Baldi. During this time, mid-2009, Baldi opened the Bel Rio restaurant and soon thereafter began experiencing financial difficulties.
In late 2009, a number of Baldi's clients received notices from the Internal Revenue Service relative to payroll tax forms that had not be filled and/or the full amount of the employer's quarterly federal tax return had not been paid. When confronted with this information, Baldi attempted to explain away the notices as IRS mistakes.
Baldi admitted today that as his financial problems continued to increase, he began diverting clients' funds to cover the costs of the Bel Rio and Cantina restaurants. He began a type of "kiting" scheme where he would use various clients' payroll trust fund monies to cover other client's tax obligations, all the while trying to balance or cover diverted clients' funds to continue his restaurant ventures and pay his personal expenses.
Knowing the scheme would collapse, Baldi fled Charlottesville on July 10, 2010 and was a fugitive until his arrest in California on January 4, 2013.
In all, Baldi willfully failed to account for and pay over tax in the amount of $202,985 for the period/quarters ending in September 2009, December 2009, March 2010 and June 2010.
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