Maintenance service company owner sentenced to 30 months in prison

John Degan, a 69-year-old Philadelphia resident and owner of Companion Services Group Inc., a building maintenance and restoration service company in Gloucester City, has been sentenced to 30 months in prison for multiple federal offenses.

U.S. Attorney Philip R. Sellinger made the announcement today, revealing the charges related to payroll tax evasion, failure to file income tax returns, and fraudulent acquisition of a Paycheck Protection Program (PPP) loan.

Earlier, Degan pleaded guilty to one count of failing to collect, account for, and pay over payroll taxes, one count of failure to file income tax returns with the Internal Revenue Service (IRS), and one count of bank fraud. U.S. District Judge Robert B. Kugler imposed the sentence today in Camden federal court.

According to court documents and statements presented during the case, Degan operated Companion Services Group Inc., offering architectural maintenance and restoration services, including restroom maintenance, glass restoration, and graffiti removal.

Degan admitted to willfully failing to file payroll tax returns for the tax years 2016 through 2020 and neglecting to pay more than $600,629 in employment taxes owed to the IRS on behalf of his employees.

To conceal his actions, Degan deliberately withheld filing Forms W-2 or Form W-3 with the Social Security Administration (SSA), attempting to hide over $4.4 million in wages paid to himself and his employees.

In addition, Degan confessed that he had consistently failed to file his personal federal income tax returns from 2016 through 2020, despite earning an annual salary ranging from $140,000 to $170,000. Furthermore, he hadn’t filed a tax return since 2003.

The corporate tax returns for Companion, a company generating over $1.4 million in annual gross receipts, were also left unfiled.

Furthermore, Degan fraudulently applied for a PPP loan, submitting false information to a lender. In April 2020, he falsely represented to the lender that Companion had employees and payroll expenses.

As part of the application process, Degan submitted fabricated IRS Forms to support his claim of paying compensation to his employees. However, those forms were never submitted to the IRS and were solely created to secure the loan.

Relying on Degan’s misrepresentations, the lender approved the PPP loan and disbursed $193,407 in federal COVID-19 emergency relief funds.

Alongside the prison term, Judge Kugler sentenced Degan to three years of supervised release. The determination of restitution will take place at a later date.

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