A Carroll County businessman has been indicted on 19 counts of federal charges ranging from tax fraud to perjury in the United States District Court for the Western District of Virginia.
Jones Keith Andrews, owner and CEO of Andrews Farming Inc. and its sister company ANDCO Logistics, Inc., was indicted in federal court through previously sealed indictments issued Jan. 23 by the U.S. District Court for the Western District of Virginia’s Abingdon division. According to the indictments, the Grand Jury charges that on or about between 2009 and March 2015, Andrews “and others conspired to defraud the United States by impeding, impairing, obstructing and defeating the lawful function of the Internal Revenue Service of the Department of the Treasury (IRS) in the ascertainment, computation, assessment, and collection of taxes.”
During that time, Andrews was owner of Andrews Farming in Carroll County. The first indictment also claims that during the same time frame, the “conspirators created and executed a system in which a portion of the salaries of employees of Andrews Farming was paid to them via paycheck and the remainder was paid in cash.” Also from 2009 to March 2015, the indictments state the conspirators cashed and caused to be cashed checks drawn on the accounts of Keith Andrews and Andrews Farming to obtain sufficient cash funds to pay employees a portion of their salary in cash.
The first indictment also claims between 2011 and March 2015, Robert Donald Morgan, III, made false entries into the accounting records of Andrews Farming “to disguise the cash payments made to employees.” Additionally, the indictment claims for each quarter from 2009 to 2014, the conspirators caused Employer’s Quarterly Federal Tax Returns, Forms 941, to be sent to the United States Government that falsely listed wages paid to employees of Andrews Farming.
“The Forms 941 were false because they listed only wages paid via paycheck and did not include the amounts paid in cash,” the indictments state.
According to the indictments, from 2009 to 2014, the conspirators caused W2 tax statements sent to the U.S. Government that falsely listed wages paid to employees of Andrews Farming. Those W2 forms were also false because they listed only wages paid via paycheck and did not include the amounts paid in cash.
The federal indictments also claim that from 2009 to 2014, cash wages not included on Forms 941 amounted to $1,215,906.50.
Indictment counts two through 18 claim that Andrews, “being a person required under Title 26 of the United States Code to collect, account for, and pay over any tax imposed by Title 26, willfully failed to collect and truthfully account for and pay over such tax.” Indictment counts two through 18 list 17 quarters from 2010 to 2014 in which “Andrews did not withhold payroll taxes from cash wages paid to employees of Andrews Farming and failed to pay over the payroll and employment taxes owed…all in violation of Title 26 of the United States Code.”
The final federal indictment claims that on or about May 5 in the Western District Court of Virginia and elsewhere, Andrews knowingly and fraudulently, in and in relation to a case under Title 11 (Bankruptcy) of the United States Code, (1) made a false oath and account, and (2) made a false declaration and statement under penalty of perjury.
“On or about May 5, 2016, Andrews made a false oath and account and a false declaration and statement when he declared under penalty of perjury that the representation in Andrews Farming, Inc.’s ‘Statement of Financial Affairs’ of a ‘Loss of approximately $1.3 million from embezzlement of employee, Robert Donald Morgan, III’ was true and correct when in fact he knew such representation was not true and correct,” the indictments state.
An indictment is a formal charge, not a finding of guilt.
Early in 2016, the United States Department of Agriculture (USDA) filed an administrative action under the Perishable Agricultural Commodities Act (PACA) against Andrews Farming, Inc. of Hillsville.
According to the USDA at the time, the Hillsville company failed to make payment to 11 produce sellers in the amount of $513,226 from December 2014 through June 2015.
“Andrews Farming Inc. will have an opportunity to request a hearing. Should USDA find that the company committed repeated and flagrant violations, it would be barred from the produce industry for two years,” the USDA said in a press release dated Feb. 9, 2016. “Furthermore, its principals could not be employed by or affiliated with any PACA licensee for one year and then only with the posting of a USDA-approved surety bond.”
Additionally, Robert Donald Morgan, III, a former accountant and bookkeeper of the company, was sentenced March 29, 2016 in federal court to serve six months in prison and ordered to pay $284,796 in restitution on charges of bank fraud and tax evasion charges.
Andrews Farming Inc. and its sister company, ANDCO Logistics, Inc., joined Carroll County officials Oct. 21, 2014 in announcing a plan to invest more than $5.6 million to expand their agricultural production, warehousing and distribution operation in Carroll County. The Virginia Economic Development Partnership worked with Carroll County, the Carroll County Industrial Development Authority, and Virginia’s aCorridor to help secure the project for Virginia. The Virginia Tobacco Indemnification and Community Revitalization Commission approved $225,000 in Tobacco Region Opportunity Funds for the project.
As part of the performance agreement with the Tobacco Commission and the Carroll County IDA, Andrews Farming and ANDCO Logistics moved their operations to the Carroll County Industrial Park in Hillsville. According to the agreement, the space was to be leased by the Carroll County IDA from Virginia Produce and subleased to Andrews Farming until April 30, 2018. Carroll County holds collateral, according to the performance agreement, of $266,494 from the company in the event the $225,000 Tobacco Commission funds cannot be repaid.
Andrews Farming went on to file for bankruptcy in U.S. Bankruptcy Court in the Western District of Virginia in Roanoke on May 5, 2016.