Episode 10: From Garbage Man To Jailbird: His Career Took A Trashy Turn and He Took His CPA With Him

Tax Crime Junkies

This episode unveils the beginning of the story of Wagdy Guirguis, a garbage man turned jailbird whose career took such a trashy turn that he even took his CPA down with him. Wagdy owned multiple business entities, one of which was GMP Associates. Right from the beginning when he founded GMP Associates in 1999, he began to perform payroll tax evasion. When the IRS realized he was stealing from his employees, they added over $800,000 in trust fund recovery penalties to his debt. In 2003, Wagdy decided to hire a CPA named Michael Higa to be the financial controller for GMP, making Michael a co-conspirator to his tax crimes. Dom and Tom return to talk about the importance of being extremely careful of what responsibilities you agree to as a tax accountant, the financial and legal consequences of betraying clients’ trust, and what ended up happening to Wagdy and Michael.

Talking Points:

• In 1999, Wagdy creates GMP Associates and starts committing payroll tax evasion, effectively stealing from his own employees
• Wagdy has the idea to turn trash into energy. He becomes President of Guam Resource Recovery Partners and attempts to negotiate a contract to be the only garbage disposal company on the island in spite of a local law prohibiting the incineration of trash on Guam
• The IRS becomes suspicious of Wagdy and in 2002, sends him a letter ordering the immediate payment of all outstanding employee tax returns along with a large penalty
• Instead of making the payments, he hires CPA Michael Higa and ropes him into his schemes
• Wagdy opens GMP Hawaii, which is exactly the same as GMP Associates - except it has no tax debts
• He continues stealing from his employees and has Michael move the money around so that it is more accessible for his personal use
• The IRS sends an additional letter demanding payment, plus even more in penalties
• Again, Wagdy creates another entity in an attempt to escape the tax debts
• The GMP Entities work a contract for the Federated States of Micronesia. Micronesia fails to pay their bills and payroll expenses start piling up for GMP
• Wagdy knows he needs to hide the money from the IRS, so he orders Michael to transfer money around the different entities to various personal accounts, at one point managing to transfer 3 million out of GMP Hawaii to his own account
• Wagdy tries to hide the money by putting it into buying a condo, but has the condo legally owned by his wife. He thinks this will protect it from the IRS when they come to collect the debt
• Was there finally a prison sentence for Wagdy? Did he end up taking his CPA down with him? Find out in Part 2!

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