Former CEO Sentenced to Prison for Failing to Pay Employment Taxes

On May 5, 2015, the Department of Justice Tax Division announced Kevin Bertram, former CEO of Distributive Networks LLC (a wireless technology company), was sentenced to serve 30 months in federal prison, followed by three years of supervised release, and ordered to pay restitution in the amount of $897,921 to the IRS for failing to pay nearly $1,000,000 in payroll taxes.

According to court documents, Mr. Bertram oversaw Distributive Networks from 2004 through 2010. The company created technology that allowed cell phone users to participate in contests, download ringtones, and receive content such as trivia and horoscopes. It was named one of Washington, D.C.'s "Great Places to Work" in 2007 by Washingtonian Magazine, for perks such as free gym memberships, Starbuck's Coffee, and 100% matching contributions to employees' 401(k) plans.

Mr. Bertram's conviction is due to his willful failure to comply with the company's employment tax obligations. For each of the quarterly periods beginning late 2007 through mid-2009, Mr. Bertram failed to file Distributive Networks' required quarterly IRS Form 941 (Employer's Quarterly Federal Tax Returns) and failed to pay employment taxes to the IRS in the amount of $927,921.78, including federal income taxes, as well as the social security and Medicare taxes of Distributive Networks' employees. During this same period, Mr. Bertram was also spending hundreds of thousands of dollars of company funds on sporting events and personal luxury goods. To read the full DOJ release, please click here

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