PHOENIX – This week, U.S. District Judge Steven P. Logan sentenced John Chandler Propstra, 47, of Paradise Valley, Ariz., to 21 months in prison and three years of supervised release. The Court also ordered Propstra to pay more than $700,000 in restitution to the Internal Revenue Service. Propstra had previously pleaded guilty to tax evasion.
Propstra owned and operated several professional employment organizations, which contracted with small business owners to provide payroll services. Propstra, through his companies, collected federal employment taxes from his clients. However, instead of paying the taxes over to the IRS as he contracted to do, Propstra kept a significant portion of the taxes for his own personal use. To conceal his theft, Propstra filed false employment tax returns with the IRS, which overstated the tax payments he purportedly made. He eventually stopped filing employment tax returns altogether. Propstra also failed to file accurate wage reports with the Social Security Administration, which the IRS could have used to cross-check against Propstra’s IRS filings and tax payments. For tax years 2010 and 2011, Propstra failed to pay over to the IRS $710,819.05 in federal employment taxes due and owing by his companies Star Human Resources, Star H Resources, Star HR, and Prop HR. Propstra’s other companies included Guaranteed HR Consulting, HR Rock, Rock HR, Consulting Guaranteed, and Rock Solid Consulting.
The investigation in this case was conducted by Internal Revenue Service Criminal Investigation. The prosecution was handled by Bridget Minder and Peter Sexton, Assistant United States Attorneys, District of Arizona, Phoenix.
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