CHARLOTTE — Three lawsuits have been filed in federal court alleging a Cornelius-based payroll company mishandled hundreds of thousands of dollars in employee tax withholdings.
Three South Carolina-based companies - all alleging fraud against Employee-Services.net, eePayrollservices and stakeholders William J. Staz, James W. Staz and Tina Staz - filed cases March 21, March 27 and April 1. Employment-services.net and eePayrollservices are based out of an office at 19410 Jetton Road, Suite 200.
Tobul Accumulator Incorporated, Carolina Material Handling Services and Collins and Lacy P.C. have a laundry list of allegations and are seeking their money returned, damages, court fees and a jury trial, according to court documents filed by the three companies’ lawyer, William Terpening. Since the plaintiffs are in a different state with charges valued more than $75,000, the lawsuits were filed in federal court.
Carolina Material Handling Services sought charges for fraud, being deceptive and affecting commerce, conversion, breach of contract and civil conspiracy. Tobul Accumulator Incorporated and Collins and Lacy also added charges for constructive fraud, breach of fiduciary duty, quantum meriut (the defendant gained at the plaintiff’s expense), the need for accounting and negligence. Some of the charges are aimed only at Employee-Services.net, while others list some or all of the defendants.
Huntersville attorney Mike Elliott, who is representing Employee-Services.net and Willliam Staz, said there is nothing he can talk about at this time and that they have 30 days to repond to the filings.
Each of the companies asserts they had contracts with Employee-Services.net to handle payroll, which included withholding state and federal income and Federal Insurance Contributions Act Tax from wages. It was then to remit the withholdings to the Internal Revenue Service as well as state taxing authorities. So far, those include South Carolina, Texas and Wisconsin.
All the companies said that was done until third quarter 2013. The money continued to be withheld but never submitted.
The IRS contacted Carolina Material Handling Services mid-March stating $211,777 had been collected but not turned in. Tobul Accumulator Incorporated was questioned about $160,000. While they didn’t give an exact amount, the Collins and Lacy lawsuit states the firm incurred fines, interest and penalties for not turning money in.
Court documents outline an alleged conversation with an Employee-services.net representative, which states more than 200 companies could be victim of similar occurrences, totaling more than $8 million.
The Employee-services.net representative is attributed as saying the IRS had been investigating for months, but it didn’t know when or where the funds were taken. Employee-services.net also claimed it had a bond to protect Carolina Material Handling Services in case that happened, its lawsuit states, but that turned out to be false.
“EePayroll and Employee-services.net are, upon information and belief, sham companies designed to conceal the efforts of the individual defendant in this action, to misappropriate funds from their clients, including C&L,” each lawsuit states in their findings of fact.
Documents filed with the N.C. Department of the Secretary of the State show James Staz is the registered agent for Employee-Services.net, which was established in 2002, with Tina Staz listed as secretary. William Staz established eePayrollservices on Dec. 17, 2013, but was involved with Employee-Service.net.
However, the lawsuits cite a letter William Staz sent to clients March 18, stating Employee-services.net clients should transfer their payroll contracts to eePayrollservices because they would be shutting down payroll service. The letter asserts Employee-services.net and eePayroll are separate entities by two different owners.
Because they have the same location, overlapping staff and clients, eePayrollservices was added to the lawsuits as a subsidiary of the other. Elliott states to his knowledge they are separate and stated the Employee-services.net was still operating as of the end of March.
The lawsuits also allege William Staz knew they were being investigated by IRS prior to the incorporation of the new business.