A Florida health care executive who controlled a network of companies was sentenced to 18 months in prison Friday for withholding millions in employee taxes that he used to fund a lavish lifestyle, including the purchase of a yacht.
Paul Walczak was ordered to serve two years of supervised release following his prison term and pay more than $4.3 million in restitution for willfully failing to pay employment taxes and filing individual income tax returns.
The executive, who ran several interconnected health care companies including Palm Health Partners, employed over 600 people with an annual payroll exceeding $24 million through his Palm Health Partners Employment Services (PHPES) entity.
Decade-long pattern of tax evasion
According to court documents, Walczak withheld more than $7.4 million in Social Security, Medicare and federal income taxes from employees’ paychecks between 2016 and 2019 but never forwarded these funds to the IRS. During this same period, he failed to pay an additional $3.4 million in employer-portion taxes.
“While Walczak was withholding taxes from the pay of his employees under the pretext of paying these funds to the IRS, he used over $1 million from his businesses’ bank accounts to purchase a yacht,” prosecutors said in court statements.
Court records showed Walczak’s tax compliance issues dated back more than a decade. The IRS had attempted multiple interventions, including personal meetings and assessments, after he failed to pay two quarters of taxes in 2011.
Luxury spending with diverted funds
While failing to meet tax obligations, Walczak transferred hundreds of thousands of dollars to personal accounts and made purchases at high-end retailers including Bergdorf Goodman, Cartier and Saks.
By 2019, facing millions in IRS civil penalties, Walczak stopped filing personal income tax returns despite receiving a $360,000 salary from PHPES and $450,000 in business account transfers.
Prosecutors demonstrated that Walczak attempted to evade collection by creating a new business called NextEra in 2019, using a family member as the nominal owner while maintaining control of operations. Through this entity, he funneled approximately $1.25 million to family members and for personal expenses.
The total tax loss to the federal government amounted to nearly $11 million, said Special Agent in Charge Emmanuel Gomez of IRS Criminal Investigation Miami Field Office.
The case was investigated by IRS Criminal Investigation and prosecuted by the Justice Department’s Tax Division.
