Nearly $1M paycheck tax scheme lands Fort Myers businessman in prison

A Fort Myers man was sentenced Monday to 2½ years in federal prison for not paying taxes he withdrew from employees' paychecks.

U.S. District Court Judge Sheri Polster Chappell also ruled that Timothy Meade, whose age was not given, would have to pay back $971,130 in restitution in addition to the 30-month sentence. 

Meade pleaded guilty in November to four of seven felony counts he was charged with for failing to pay taxes he had collected from employees.

According to a pair of sentencing memorandums in court records and the U.S. Department of Justice, here is what happened:

Meade, who was convicted of income tax evasion in 2005, owned a pair of prison phone call service companies named Inmate Direct and, before that, Millicorp from 2009 through 2023.

The companies operated under the name ConsCall Home and sold prepaid phone cards to prison inmates.

In his role as the companies’ owner, he withheld taxes from employee paychecks as required by law. But rather than passing the money on to the IRS starting in 2011 he kept the money, spending it on himself and the business.

He also did not pay the business’ portion of his employees’ Social Security and Medicare taxes, prosecutors and investigators say.

The IRS began its collection efforts in 2012, first through installment agreements then liens, levies and civil penalties. That included an April 2012 agreement to pay $5,000 per month that Meade stopped making payments on in less than a year.

But as the IRS was trying to claw back what it was owed, Meade, who was still operating Millicorp, continued to withdraw the taxes from paychecks while keeping the money for himself.

Then, “in the middle of those collection efforts,” prosecutors write in the government’s sentencing memorandum, Meade abruptly shut down Millicorp and opened a new company, with new bank accounts. This was Inmate Direct.

He continued to operate ConsCall Home as before but with the new name and new accounts. 

“Nothing changed though,” prosecutors write. “He continued to withhold taxes from his employees’ paychecks, pocketed those funds, and still refused to pay over to the IRS the taxes that he had taken out of their paychecks.”

In all, the IRS found that he did not pay $971,130 in taxes.

G. Ellis Summers Jr., an assistant federal defender representing Meade, writes in the defense’s sentencing memorandum that while operating Millicorp Meade was acting in good faith and believed that as long as he advised the government of what he owed, it wasn’t a criminal act to not pay the payroll tax.

The crime, the attorney argues, happened after Inmate Direct was founded.

“On the one hand, Millicorp was a legitimate business, in which Mr. Meade was in good faith working with the government to pay his taxes and accurately advise the government of what he owed every quarter,” the attorney writes.

“On the other hand, Inmate Direct was either a tax evasion vehicle or fraud from the start. Mr. Meade’s business was collapsing at the end of 2016, and Mr. Meade took fraudulent steps to stay in business.”

Summers makes the argument in an effort to persuade the judge Meade should be sentenced only for the unpaid taxes accrued while running Inmate Direct “because his actions were fundamentally different in nature.”

“Millicorp and Inmate Direct, although sharing one product, were not a common scheme or plan,” he writes, asking the court to sentence Meade to 12 months and a day.

Prosecutors, though, urged the judge in the memorandum to consider the full extent of the operation when sentencing Meade, asking for 37 months.

“Through Millicorp, Meade took hundreds of thousands of dollars from his employees under the pretense of withholding their taxes. He then spent their taxes however he wanted — for years,” prosecutors wrote.

“He not only committed the same offenses as he did with Inmate Direct, but he also did so while operating the same business, with the same employees, and failing to pay the same taxes — trust fund taxes.”

With the 30-month sentence, the judge sided much closer to the request from prosecutors.