US ATTORNEY WILLIAM MCSWAIN.jpg

US Attorney William M. McSwain

PHILADELPHIA — A Pennsburg man who prosecutors say “shamefully” abused the trust of his Lancaster employer to embezzle nearly $3 million from the company was sent to federal prison and ordered to pay a hefty restitution bill.

Steven J. Russo, 43, was sentenced in U.S. District Court to three years in prison after he pleaded guilty to charges of wire fraud and filing false tax returns in connection with embezzling $2.79 million from his former employer between November 2013 and October 2018 while he served as the director of information technology.

The Lancaster design and manufacturing business for which Russo worked was not identified by federal authorities.

U.S. District Court Judge Jeffery L. Schmehl also ordered Russo to pay $2,798,000 in restitution to his former employer and $980,000 in restitution to the Internal Revenue Service.

U.S. Attorney William M. McSwain said Russo stole the funds by abusing his trusted position.

“Embezzlement and tax fraud are forms of stealing, pure and simple,” McSwain said. “Russo held a senior position of trust with his former employer, and shamefully used that access to steal millions of dollars, while also ripping off the government and honest tax payers in the process.

“My office will continue to work with our law enforcement partners to protect innocent businesses and taxpayers from being victimized by this type of fraud,” McSwain added.

McSwain said Russo embezzled the money in a variety of ways.

Russo’s schemes included the use of sham corporations with virtual addresses, fake invoices and access to the company’s credit card and online accounts. Russo also filed false tax returns, failing to report his income accurately and claiming false expenses and deductions, resulting in a tax debt to the IRS of nearly $1 million, prosecutors alleged.

Specifically, with the charges, federal prosecutors alleged Russo used his access to his former employer’s lines of credit and credit cards to make unearned payments to the sham companies owned and controlled by him, and to purchase items that he kept for his personal use or sold for his personal gain.

Russo allegedly also caused his former employer to issue checks to the companies he owned and controlled, and to make payments via PayPal to an account he controlled. Russo reported his taxable income for 2017 as only $18,579, when in reality his taxable income was nearly $1 million, prosecutors alleged.

“Mr. Russo’s decision to use deceit and fraud to line his pockets with his employer’s money and shirk his tax obligations has cost him his freedom,” said IRS Criminal Investigation Special Agent in Charge Thomas Fattorusso. “This sentence should serve as a deterrent to those who might contemplate similar actions.”

The case was investigated by the Internal Revenue Service Criminal Investigations, and was prosecuted by Assistant U.S. Attorney Bea L. Witzleben.

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