Listen to this article

In Camden federal court June 27, John Degan of Philadelphia, was sentenced to 30 months in prison for payroll tax fraud and pandemic loan fraud.

Degan, 69, was the owner and operator of Companion Services Group Inc., a building maintenance and restoration service company based in Gloucester City. Last October, he pleaded guilty before U.S. District Judge Robert Kugler to an information charging him with one count of failing to collect, account for, and pay over payroll taxes; one count of failure to file income tax returns with the IRS; and one count of bank fraud.

According to prosecutors, for the tax years 2016 through 2020, Degan willfully failed to file payroll tax returns and to pay more than $600,629 in withheld employment taxes on behalf of his employees. They say he also attempted to conceal over $4.4 million from the IRS in wages that he paid to himself and his employees by not filing and submitting W-2 and W-3 forms to the Social Security Administration (SSA).

“Degan admitted that he received a yearly salary that ranged from $140,000 to $170,000 from Companion, willfully failed to file his federal income tax returns for tax years 2016 through 2020, and has not filed a tax return since 2003,” according to court documents and statements. “He also failed to file the corporate tax returns for Companion, a business that generated more than $1.4 million in gross receipts yearly.”

In April 2020, prosecutors said Degan submitted a fraudulent application to obtain a Payroll Paycheck Program (PPP) loan for Companion, in which he falsely represented that the company had employees and payroll expenses.

“In further support of his application, Degan submitted various IRS Forms to establish that he was paying compensation to his employees,” according to prosecutors. “Those forms were never actually submitted to the IRS; instead, they were false forms that were only created and used for the purpose of securing the loan. Based on Degan’s misrepresentations, the lender approved the PPP loan and disbursed $193,407 in federal COVID-19 emergency relief funds.”

In addition to the 30 months in prison, Degan was also sentenced to three years of supervised release; restitution will be determined at a later date.