Businessman convicted on 63 counts of tax evasion
A jury returned a verdict of guilty on all counts against Greensboro businessman Greg Harrison in a tax evasion case that wrapped up Tuesday evening in federal court in Winston-Salem.
The verdict took several minutes to read as the clerk outlined guilty verdicts on 59 counts of willful failure to pay federal payroll taxes for 14 different companies over 12 quarterly periods, one count of corrupt endeavor to obstruct and impede internal revenue laws, and three counts of willful failure to pay individual income taxes.
US District Court Judge James A. Beaty agreed to a request by prosecutor Jeffrey McLellan to hold Harrison in detention as he awaits sentencing in April. McLellan argued that Harrison is a flight risk because he potentially faces a prison sentence of about 10 years, also noting testimony indicating the defendant was highly mobile through the frequent use of corporate jets and that his word was not to be trusted.
“The court has seen that this defendant has made misrepresentations and introduced false and manufactured documents,” said McLellan, a trial attorney with the tax division of the US Justice Department in Washington.
Harrison’s expression remained impassive throughout the verdict, but his fianc’e, Melissa Cullen could be heard quietly sobbing. The scene grew more emotional out in the hallway after the trial recessed as Cullen and Harrison’s mother, Billie Baggett cried. Business associates, family members and other supporters appeared angry and grim.
The guilty verdict holds Harrison accountable for failing to pay over almost $16 million in federal payroll taxes, but McLellan told the judge that the actual amount is closer to $40 million. The prosecutor said the government could not charge the defendant for all years that taxes were not paid because some were outside of the statute of limitations, and said the government did not know if Harrison failed to make matching contributions to employees withheld payroll taxes.
Assistant US Attorney Frank Chut pointed his finger accusingly at Harrison during closing arguments, his voice raised in furious indignation.
“Those trust funds were not there to buy gyms, to make B-movies, to buy a cigarette boat,” Chut said. “Those payroll taxes belong to the people of the United States, not this man.”
Harrison operated a network of staffing companies that operated in at least nine states until 2006, when he sold the assets to former business partners Mark Griffin and Ray McDaniel. In 2008, he took back the companies when his former partners defaulted. As president of Global Labor, he continues to license and finance a diminished cohort of staffing companies in Greensboro, Gastonia and Jacksonville, Fla. Since the midpart of the last decade, Harrison has also financed movies, claiming a producer credit on the 2006 film National Lampoon’s Pucked starring Jon Bon Jovi, and plowed funds from the staffing companies into a gym in Jamestown called Extreme Fitness and a real estate company, according to evidence introduced by the government.
On Monday, Harrison took the stand and the defense introduced into evidence a purported Interim Management Agreement bearing the signatures of the defendant, along with those of Griffin and McDaniel. The defense argued that the document, which was dated June 30, 2004 — around the same time the Internal Revenue Services stopped receiving payroll tax deposits from the staffing companies — demonstrated that Harrison relinquished control to Griffin and McDaniel. Harrison testified that after that point, Griffin had been responsible for handling payroll taxes.
After the defense rested on Tuesday, the government had a chance to bring its first witness back to testify about the purported agreement. McDaniel testified that he did not sign the agreement, adding, “It’s a false document.”
In his testimony on Monday, Harrison attempted to deflect blame onto Griffin, and frequently contradicted the government’s evidence.
Harrison testified that when IRS Revenue Officer Crystal Peoples confronted him in 2006 about a series of payroll tax deposits that were not accompanied by returns, he told her that the company had been sold. Peoples asked Harrison for the tax identification number for the business.
Harrison told the court that he called Griffin and explained that there was potentially a large deposit that would be credited back.
“Mr. Griffin gave me the ID number,” Harrison testified.
The US government has accused Harrison of deliberately misleading Peoples by giving her a tax ID number that turned out to be associated with his mother’s staffing company in South Carolina, IHT Staffing/ Grand Strand. Harrison testified that at the time he gave the tax ID number to Peoples, he believed it was associated with IHT, a company he formed with his grandfather in 1993.
In later years, a company called IHT of SC was formed that acted as a licensee to Global Labor, for which Harrison serves as president. Harrison said IHT of SC handled staffing for the Charleston ports.
Prosecutor Frank Chut appeared to relish calling Harrison on the striking similarities in the names of the businesses.
“That could be confusing,” he said. “To whom?” Harrison parried. “To the IRS, for one.” “They got confused by quite a bit,” Harrison retorted. “That’s why I’ve had to hire an attorney to straighten this out before I was arrested on 63 counts.”
“There is a pattern of deception that goes even to this courtroom,” Chut charged. “False documents. Deceptive statements.
“This is the man in control,” he added.
“This is the man who benefits. This is the man who corruptly obstructs the IRS.”
Public defender Tom Cochran acknowledged McDaniel’s statement during his closing argument, adding that the court could only speculate on the former business partner’s motive for saying that the document was false.
“If he owns up to it, he’s on the hook for the taxes,” Cochran said. “That’s his incentive.”
After deliberating for two and a half hours, the jury asked the judge for clarification on the document, suggesting their decision got hung up on the question of whether Harrison had responsibility for payroll taxes. Beaty said the jury had asked whether there was an original of the purported Interim Management Agreement that was introduced as evidence by the defense.
“That’s a factual question that the court cannot answer,” Beaty told counsel for the defendant and government.
By 7 p.m., less than four hours after receiving their instructions, the 12 jurors returned with their verdict.
McLellan also said after the verdict that Harrison should not be trusted because “he made representations which the magistrate relied upon to determine that he was unable to pay for counsel.” That represenation didn’t square with testimony during the trial, the prosecutor added.
“This is a highly suspicious representation given that to this day the defendant is collecting fees” from business associates operating staffing companies under licensing agreements with Global Labor, McLellan said, adding that Harrison could be earning as much as $2,500 a week.
Judge Beaty said he would instruct the pre-trial office to complete a report on Harrison’s current earnings from Global Labor.