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Date: 2/28/2024
SPRINGFIELD — The former personnel director for the town of Agawam is facing up to three years in prison after agreeing to plead guilty to defrauding the federal government of $261,102 by filing false tax returns over 10 years, according to court records.
In October 2021, federal agents showed up at Agawam’s Town Hall and served Coleen Gruska, 66, with a subpoena to search her financial records.
That search warrant led to Gruska, who resides in Feeding Hills, being formally charged the next month with four counts of filing false tax returns as a federally registered tax preparer, according to court records.
She no longer works for the town. Asked to comment, Agawam Mayor Christopher Johnson said: “The federal charges that she currently faces have nothing to do with her prior employment.”
According to the charging documents filed by Assistant U.S. Attorney Michael Mazur, federal agents seized all 106 tax returns Gruska had filed between 2011 and 2020.
After examining the returns, investigators found that 34 of the returns prepared by Gruska “reflected a pattern of fabricated or overstated Schedule C losses, which resulted in a substantially reduced tax liability for each taxpayer,” including herself.
Schedule C tax forms are used by sole proprietorships to report income or losses on the 1040 individual tax return.
The government’s statement of facts said Gruska started a small tax preparation business in 2011 that mainly served family members and friends. The 34 flagged Schedule C forms showed losses that were either “dramatically overstated or were for businesses that did not exist,” according to the statement of facts.
Gruska also prepared the returns for her legitimate tax preparation business and a house and yard cleaning business she falsely claimed she operated, court documents said.
In 2017, for the tax prep business, she reported $27,469 in losses and $44,720 in expenses for the cleaning business, according to court records. However, the government found that actual losses for the tax business was $350 and none for cleaning business.
When she filed tax returns for her businesses the next three years, she continued to overstate the expenses of both when the actual figures were $350 and $0, respectively. In 2018, she reported losses for the tax service and cleaning businesses, respectively, of $28,195 and $50,380; in 2019, she reported $19,205 and $43,463; and in 2020, she reported $20,062 and $50,437.
In all those filings, she certified she had written documentation in support of the losses when she knew there was no documentation, according to the statement of facts.
Between 2011 and 2020, according to the statement of facts, all the filings for the cleaning business were false, because it didn’t exist. Prosecutors said Gruska used the same fraudulent scheme for two legitimate businesses owned by one individual and for four individuals for businesses that did not exist.
Between 2011 and 2020, she filed returns for the owner of a legitimate snowplowing and roofing business. The business owner did not inspect the returns before they were filed. Gruska reported expenses for the snowplowing business at $797,884 and expenses for the roofing business of $208,313 per year, when the actual figures were $153,925 and $3,381, respectively.
She also filed returns between 2011 and 2020 for an individual who ran a soccer coaching business. According to the statement of facts, Gruska knew the individual, who allowed Gruska to use her personal identification number, volunteered as an unpaid coach, but reported Schedule C expenses on her return of $233,561.
Between 2016 and 2020 Gruska also reported expenses for a snowplow business that didn’t exist of $49,596 for an individual who allowed her to use his personal identification number to file his return.
And between 2016 and 2018, two individuals allowed Gruska to file a joint return, using their personal identification numbers, that listed $29,600 in expenses for a snowplowing business that didn’t exist.
As a result of the fraudulent activities, the government received $261,102 less in tax payments than it should have, which Gruska must pay back as result of the plea agreement she reached with the U.S. Attorney’s Office.
While the law provides for a possible three years in prison, Mazur has recommended Gruska be incarcerated for 18 months, serve 12 months of supervised probation, and pay a fine, which could be as much as $250,000, in addition to the restitution.
She is scheduled to be sentenced in U.S. District Court in Springfield on May 2.