The owner of several sleep disorder centers in Central Virginia was sentenced Tuesday to two years in prison for his willful failure to account for or pay tax withholdings to the Internal Revenue Service.
David Neel, 63, of Chester, was the sole owner and operator of Siesta Health LLC, Healthy Sleep LLC and Healthy Sleep Partners.
According to court documents, Neel withheld federal trust fund taxes from his employees’ wages but failed to report those withholdings or pay them to the IRS. Instead, Neel kept the withheld funds for his own personal use.
Trust fund taxes consist of withholdings for federal income taxes and employee contributions to Medicare and Social Security.
Neel did not file a quarterly federal tax return in the name of any of his sleep disorder companies from at least the first quarter of 2015 through the last quarter of 2020 and did not make any trust fund tax payments to the IRS.
Neel issued W-2s to his employees indicating that he had withheld $311,985 in trust fund taxes for this period. Neel also failed to pay over the employer’s share of Medicare and Social Security contributions for those and other quarters totaling $148,558. The total amount Neel failed to pay to the IRS was at least $460,543.
During the periods Neel failed to pay the required employee withholdings and matching amounts, he had access to significant company funds, which he used to bankroll his lavish personal expenses.
Personal expenses included:
- Monthly rent of $5,000 for a 215-acre horse farm and residence (as well as a prior residence), totaling more than $220,000;
- $500 to $1,000 per month for work on his personal residence totaling approximately $30,000;
- Almost $40,000 paid for life insurance
- Tuition and related educational expenses for the daughter of Neel’s significant other
- Purchase of a Ford F600 truck
If you suspect a business is not in compliance with taxes owed or for more information on how to report tax fraud, see the IRS’s website here.
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Crystal Graham
