The Department of Justice had a busy week in enforcement actions against real estate-related companies.
First, the chief financial officer of a Mississippi-based construction company pleaded guilty to willfully failing to report and pay employment taxes, according to a DOJ press release.
Julian Russ, the CFO of the Mississippi-based Community Construction Company, admitted to not filing the required quarterly employment tax returns or paying taxes withheld from employees’ wages to the IRS. The tax evasion spanned from 2012 to October 2018 and resulted in a tax loss of more than $6 million.
Russ, according to court documents and statements, was aware of, but deliberately neglected, his tax responsibilities. He faces a maximum of five years in prison, along with supervised release, restitution, and monetary penalties. The date of his sentencing before a federal district judge was not listed.
In a separate action, property management company FPI Management Inc. agreed to pay nearly $75,000 to settle allegations of violating the Servicemembers Civil Relief Act. The Justice Department announced the resolution in a statement, saying that FPI unlawfully charged nine service members who invoked their right to terminate apartment leases after receiving military orders to relocate.
The SCRA is designed to protect servicemembers, granting them various rights and safeguards while they serve in the military. One provision allows service members to terminate residential leases without penalty when faced with military orders for a permanent change of station, deployment, or retirement. Landlords are prohibited from imposing early termination fees on service members exercising this right.
The investigation into FPI’s practices was initiated after the Coast Guard Legal Assistance referred two cases where FPI demanded repayment from service members terminating their leases early under the SCRA.
Under the proposed consent order, subject to court approval, FPI will pay $51,500 to the affected servicemembers and a $22,500 civil penalty to the United States. Additionally, FPI will be required to rectify the servicemembers’ tenant database entries, implement SCRA-compliant policies and procedures, and provide SCRA training to its employees.
The settlement reflects the Justice Department’s ongoing enforcement efforts to uphold the SCRA, which includes securing over $481 million in monetary relief for more than 146,000 service members since 2011.