Court sentences Ohio businessman to 2 years in prison for failing to forward federal payroll taxes, stealing workers’ healthcare contributions

CLEVELAND, OH – A North Royalton businessman who failed to pay payroll taxes to the IRS and embezzled health care premiums deducted from his employees’ checks, will spend the next two years in prison and pay restitution of $558,697 to the IRS and $3,807 to the participants of his companies’ health care plan.

Under terms of the plea agreement, Judge Sara Lioi of the U.S. District Court of the Northern District of Ohio in Cleveland sentenced John George Medas to two years in prison on May 20th , after he pleaded guilty to one count of theft or embezzlement in connection with healthcare, and 25 counts of willful failure to collect, account for and pay taxes to the IRS while serving as president of three Cleveland-area businesses, Guarantee Product Specialties Inc., Fulton Manufacturing Industries LLC and FMI Products LLC. Medas will serve three years of supervised release following his prison term.  

Medas’ guilty plea comes after a joint investigation by the U.S. Department of Labor’s Employee Benefits Security Administration’s Cincinnati office and the IRS. The U.S. Attorney’s Office for the Northern District of Ohio prosecuted the case.

Investigators found from April 30, 2014, to Jan. 31, 2019, Medas withheld payroll taxes from employees at all three companies but did not pay them to the IRS. Medas also withheld $3,807 in voluntary pre-tax health contributions from employees’ paychecks for the FMI Products LLC Health Plan and embezzled the funds between July 29, 2016, and Sept. 16, 2016.

“When employers take money out of workers’ paychecks for taxes and health insurance, they need to make sure the taxes and premiums get paid. Embezzlement betrays workers’ trust, cheats them of wages and potentially places their health and financial security in jeopardy,” said Employee Benefits Security Administration Regional Director L. Joe Rivers in Cincinnati. “The U.S. Department of Labor will continue to pursue employers who violate the law to ensure employees are not left holding the bag for their employer’s crimes.”

Medas was indicted on May 20, 2020 and has executed a plea agreement. The plea agreement was filed on Dec. 28, 2021.

Employers and workers can reach EBSA toll-free at 866-444-3272 for help with problems related to private sector retirement and health plans. Learn more about EBSA.

U.S. v. John George Medas

Case No: 1:20-cr-00255-SL