Date: 06-19-2014

Case Style: United States of America v. James Kirk Baldi

Case Number: 3:14-cr-00014-GEC

Judge: GEC

Court: United States District Court for the Western District of Virginia (Albemarle County)

Plaintiff's Attorney: Ronald Huber and Joe Giannullo

Defendant's Attorney: Andrea S. Lantz Harris - FPD

Description: CHARLOTTESVILLE, VIRGINIA – A former accountant and restaurateur pled guilty yesterday in the United States District Court for the Western District of Virginia in Charlottesville.

James Kirk Baldi, 50, of Charlottesville, Va., waived his right to be indicted and pled guilty yesterday to a one-count Information charging him with willful failure to collect or pay over tax owing to the United States. At sentencing, Baldi faces a maximum possible penalty of up to five years in prison and/or a fine of up to $10,000.

“Mr. Baldi violated the trust of his clients when he stole their money and used it to pursue his failed business ventures,” United States Attorney Timothy J. Heaphy said today. “He admitted to this scheme and agreed to repay the United States the taxes he failed to pay during the course of his fraud. This case demonstrates our commitment to pursue restitution for all victims of financial fraud.”

"There is no mistaking the egregiousness of James Baldi’s conduct and the selfishness of his actions. As the owner of an accounting firm, he was entrusted with the responsibility of providing employment tax services and remitting employment tax funds to the Internal Revenue Service. Instead he chose to use the employment tax funds for his own personal use, not only violating the trust placed with him and potentially jeopardizing the businesses of his clients, but also violating the law,” said Thomas J Kelly, Special Agent in Charge, IRS Criminal Investigation, Washington D.C. Field Office. “IRS Criminal Investigation will continue to vigorously pursue anyone who collects taxes and fails to timely remit those taxes."

According to evidence presented at yesterday’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 yesterday 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.

The investigation of the case was conducted by Internal Revenue Service, Criminal Investigations and the Federal Bureau of Investigation. Assistant United States Attorney Ronald Huber and Joe Giannullo with the Tax Division of the Department of Justice are prosecuting the case for the United States.

Outcome: See above

Plaintiff's Experts:

Defendant's Experts:

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