Staffing company owner sentenced to 3 years in prison for not paying $18 million in taxes

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The owner of a Houston staffing company was sentenced to three years in prison for not paying $18 million in payroll, Social Security and Medicare taxes, spending the money instead on his ranch and personal travel.

Richard Floyd Tatum Jr., 57, was sentenced Thursday by U.S. District Judge Alfred Bennett who also ordered Tatum to repay the $18 million.

Tatum, who faced up to five years in prison, pleaded guilty to one count of failing to pay employment taxes in March.

Tatum owned Associated Marine & Industrial Staffing, a personnel firm that provided temporary workers to businesses in Texas and other states. The company had about 1,000 employees, including internal employees who worked for the staffing firm and external employees assigned to work at client works sites.

Between March 2008 and December 2012, Tatum withheld $12 million in payroll taxes from his employees but did not forward the funds to the IRS, according to the Department of Justice. Tatum also failed to pay the company's portion of Social Security and Medicare for that same period. He used the money to make payments on his ranch and take personal trips to Las Vegas, Hawaii and France, the Justice Department said.

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Richard O. Ely II, the Houston lawyer representing Tatum, said Tatum is destitute and doesn't have a way to pay the money back.

"He lost everything he had," said Ely, including property Tatum owned that was seized to pay bills. Associated Marine & Industrial Staffing is out of business and has no assets.

Tatum is free on bond until he is notified where to report to begin serving his sentence, said Ely.