Local men sentenced for Texas tax fraud

Two Springfield residents who operated a medical center in Lubbock, Texas, have been sentenced to federal prison time and fines for failing to pay payroll taxes.

Herschel Breig, 64, and James Cheek, 64, each were sentenced to 60 months in federal prison and fines of $10,000 apiece following guilty pleas in February. Breig and Cheek have paid $120,000 in restitution to individual victims in accordance with their plea agreements, and they also received a roughly $5 million restitution order by the the court, according to a June 15 news release from the U.S. Department of Justice.

Breig and Cheek acquired Lubbock-based Highland Medical Center via Shiloh Health Services in March 2006. Though others were involved in Shiloh, Cheek was its founder, executive officer and president, while Breig was its vice president and secretary.

In calendar years 2006-08, Highland Medical Center withheld payroll taxes from employees' paychecks, and from December 2006-May 2008, the business didn't pay the Internal Revenue Service.

In their guilty pleas, Breig admitted he was responsible for collecting and accounting for payroll taxes withheld from employee paychecks, and Cheek admitted he willfully failed to truthfully account for and pay the taxes to the IRS.

The release pointed to one period - April 1, 2007-June 30, 2007 - when the defendants failed to pay over $337,470 in taxes owed to the IRS.

The case was investigated by IRS-Criminal Investigation and the Department of Labor, and Assistant U.S. Attorney Ann Roberts of the U.S. attorney’s office in Lubbock was charged with the prosecution.