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Post date: March 9 2016

A.G. Schneiderman And Tax Commissioner Boone Announce Guilty Plea Of Nassau County Body Shop Owner

Defendant Ronald Ustica, Jr., Owner of R&U Auto Body, Inc., Pleads Guilty to Felony Tax Fraud, Will Forfeit $1.5M To Be Paid As Restitution; Company Also Expected To Plead Guilty to Felony Insurance Fraud
Schneiderman: This Defendant Attempted To Skirt The Rules, And In The Process Hardworking New Yorkers Who Already Pay Their Fair Share Picked Up The Tab

ALBANY—Attorney General Eric T. Schneiderman and Department of Taxation and Finance Commissioner Boone announced today the guilty plea of Ronald Ustica, Jr., 47, owner of R&U Auto Body, Inc., headquartered in Merrick, New York.  Ustica pleaded guilty today in Albany County Court to Criminal Tax Fraud in the Second Degree, a Class C felony.  His company is expected to plead guilty to felony Insurance Fraud charges in Nassau County later this month.  As part of his plea, Ustica agreed to forfeit over $1.5 million in restitution, to be paid to the Department of Tax and Finance and to auto insurance companies.  

“This defendant attempted to skirt the rules, and in the process hardworking New Yorkers who already pay their fair share picked up the tab,” Attorney General Schneiderman said. “We will continue to work with Commissioner Boone to root out tax fraudsters who try to skip out on their tax bill.”

"Let this case serve as a warning to those who consider stealing the sales tax that they collect from their customers,” said Commissioner Boone. “We will continue to partner with Attorney General Schneiderman and all levels of law enforcement to bring tax evaders to justice and ensure a level playing field for law-abiding businesses.”

Today's conviction is the result of a long-term investigation conducted by the Auto Insurance Fraud Unit (AIFU) of the Attorney General’s Criminal Enforcement and Financial Crimes Bureau, together with the Criminal Investigation’s Division of the New York State Department of Taxation and Finance (CID).   

As a result of the joint investigation, Ustica and R&U were indicted in June 2015 in Albany County on charges including Grand Larceny in the Second Degree and Criminal Tax Fraud in the Second Degree, both Class C felonies, for collecting but failing to remit to New York State over $570,000 in sales taxes between June 1, 2007 and March 21, 2011.  According to the indictment, Ustica and R&U also intentionally filed false quarterly sales tax returns which grossly underreported millions of dollars in taxable sales at R&U. 

Simultaneous with Ustica's arrest on the Albany indictment, investigators from AIFU and CID executed search warrants at Ustica’s home, at the headquarters of R&U, and at half a dozen banks where Ustica maintained safe deposit boxes, recovering over $1 million in cash.  The Attorney General’s Office also initiated civil asset forfeiture proceedings against Ustica and R&U, for a total seizure of over $1.5 million in criminal proceeds. 

In addition to the tax case, AIFU conducted a parallel investigation into auto insurance fraud by R&U and its employees.  According to a felony complaint filed in Nassau County this January, an undercover investigation by AIFU allegedly revealed that an employee of R&U fraudulently enhanced the damage to a BMW sedan brought to the shop for repairs.  According to the felony complaint, R&U then allegedly fraudulently invoiced GEICO for over $3,000 for work that was not actually performed and work that did not need to be performed on the sedan.  

Today, Ustica entered a guilty plea before the Hon. Roger D. McDonough in Albany County Supreme Court to one count of Criminal Tax Fraud in the Second Degree, a class C felony.  Ustica admitted that on or about December 18, 2010, he intentionally and willfully filed a false quarterly sales tax return on behalf of R&U, knowing that it contained materially false information, all in an effort to defraud the New York State Tax Department by underreporting the sales tax collected by him and R&U during the previous quarter.  

Under the plea terms described by prosecutors today in court, R&U Auto Body is expected to plead guilty later this month in Nassau County to one count of Insurance Fraud in the Fourth Degree, a class E felony. 

As part of his plea, Ustica agreed to forfeit the over $1.5 million previously seized by the OAG to pay restitution to the New York State Tax Department and auto insurance companies who overpaid for services performed by R&U.  Ustica is scheduled to be sentenced by Hon. Roger D. McDonough to 5 years’ probation on May 6. 

The Attorney General thanked the National Insurance Crime Bureau and GEICO for their valuable assistance in this investigation. 

This case is being prosecuted by Assistant Attorney General Benjamin S. Clark of the Criminal Enforcement and Financial Crimes Bureau. The Auto Insurance Fraud Unit is led by Chief Joseph D’Arrigo. The Criminal Enforcement and Financial Crimes Bureau is led by Bureau Chief Gary T. Fishman and Deputy Bureau Chief Stephanie Swenton.  The Division of Criminal Justice is led by Executive Deputy Attorney General Kelly Donovan.

The Attorney General's investigation was conducted by Investigator Kyle Vitale-O’Sullivan, formerly of the Auto Insurance Fraud Unit, and Investigator Patrick Lubin, under the direction of Investigators Edward Keegan and Natalie Shifrin and Deputy Chief Leonard D'Alessandro. The Investigations Bureau is led by Chief Dominick Zarrella. Forensic auditing was performed by Dmitry Temis of the Auto Insurance Fraud Unit.

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