April 18, 2014

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Additional tax fraud allegations surface against Lorain consultant

ELYRIA — A Cleveland nursery school has sued Lorain tax consultant Richard Zakarian, accusing him of keeping more than $117,000 he withdrew from the company’s bank account to pay taxes that were never sent to the appropriate government agencies.

Zakarian

Zakarian, 47, already is jailed on theft charges for similar allegations involving Spitzer Management Inc., which has accused him of stealing more than $700,000, and Pallens Auto Concepts, which contends he took $20,198 from its account and didn’t use the money to cover its tax bills.

According to the latest lawsuit filed against Zakarian and his company, Benjamin Franklin Tax Service, on Wednesday, Pooh County Day Nursery School was approached in 2010 by Mark Douglas, who identified himself as an account executive for the company and the charitable Benjamin Franklin Foundation.

Douglas, who also is named as a defendant in the lawsuit, told the nursery school that the school was eligible for a grant to cover payroll, tax and accounting services. On Oct. 21, 2010, Zakarian and Douglas told the school it had received a grant of $3,360 to cover those services in tax years 2011 and 2012.

“The so-called grant was merely a means by which defendants could gain access to the school’s and its employees’ confidential and proprietary financial information and bank accounts and enable them to convert the school’s funds to their own use under the guise of paying payroll and withholding tax,” attorneys for the school wrote in the lawsuit.

Over an 18-month period, Zakarian’s company withdrew $117,000 from the school’s accounts and didn’t pay the U.S. Internal Revenue Service and other taxing agencies, according to the lawsuit.

Colin Skinner, one of the attorneys representing the nursery school, said the school only recently learned of the problem and moved quickly to take court action so it can lay claim to the money Zakarian allegedly stole. Skinner said a police report hasn’t been filed so far because his clients are more interested in getting their money back.

Zakarian’s business has come under increasing scrutiny after Spitzer learned over the summer that his company had failed to pay taxes to the IRS and Ohio. In total, according to a lawsuit filed by Spitzer, Zakarian’s firm was given $753,831.98 to cover its taxes.

According to Spitzer attorney Anthony Giardini, $591,586 of that money was supposed to go to the IRS, but Zakarian allegedly only forwarded $24,456 to the agency. Another $186,000 was supposed to have gone to Ohio, but doesn’t appear to have been paid either, Giardini has said.

Pallens Auto Concepts had a similar complaint and owner Isabel Pallens told Lorain police in August that when she contacted Zakarian’s company to ask why it had withdrawn $20,198 from her bank account to cover taxes that hadn’t been paid, she was told they would take care of the situation.

Lorain police filed a theft charge against Zakarian for allegedly stealing from Pallens on Aug. 30 and that case is now awaiting presentation to a county grand jury. Zakarian was indicted on a theft charge for the Spitzer case earlier in August.

Both Lorain County Prosecutor Dennis Will and Giardini have said their offices have been contacted by numerous other potential victims.

Lorain police received a call last week from Gary Pilcher, chairman of the board for Animal Charity Humane Society in Youngstown, complaining about Zakarian’s business as well.

According to the report, the humane society hired Benjamin Franklin Tax Service in January to handle payroll taxes for their employees and had given the company $62,059.73 since then, although no taxes have been paid.

Lorain police Detective Buddy Sivert wrote that Pilcher’s case was forwarded to Will’s office, which is handling the investigation.

An attorney for Zakarian previously said her client intends to address the allegations against him.

Zakarian filed for bankruptcy in September 2009, claiming debts of between $100,001 and $500,000, according to a filing in the U.S. Bankruptcy Court of Northern Ohio. The case was thrown out on Oct. 14, 2009, because Zakarian told the court he couldn’t find a credit counselor to work with.

Contact Brad Dicken at 329-7147 or bdicken@chroniclet.com.