GROSSE POINTE PARK, Mich. – A Grosse Pointe Park man used a fake company to hide that he sold $10 million worth of drugs to one person -- the owner of the real company he worked for, according to federal officials.
Matthew D. Adams, of Grosse Pointe Park, has been named in an information that was filed Jan. 5 in United States District Court.
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The information says Adams worked for an unnamed building and maintenance company from 2004-2012. That company was owned and operated by a person who is designated as “Individual A” in the information.
In 2012, Adams owned and operated a company called MDA Property Services, which provided building and maintenance services, according to authorities. MDA Property Services served as a contractor for Adams’ former company through January 2016.
Officials said MDA Property Services didn’t have any other customers. It only provided building and maintenance services for the company owned by “Individual A.”
Drugs sold to ‘Individual A’
According to the information, Adams sold illegal drugs to “Individual A” from 2008 through 2017, and “Individual A” would pay for the drugs with money embezzled from his own company, authorities said.
Starting in 2012, Adams and “Individual A” agreed to make the drug payments from the legitimate company look like they were payments to MDA Property Services for maintenance work, according to the information.
MDA Property Services did perform some legitimate work for the company, but about 97% of the money paid to MDA Property Services was actually payment for drugs, federal officials said.
Adams was paid more than $10 million for illegal drugs sold to “Individual A” between 2013 and 2017, authorities said. He received the money in the form of checks made out to him or one of his companies, usually MDA Property Services.
Officials said Adams would deposit some of the checks into his personal bank account and others into the account of MDA Property Services.
He cashed the remainder of the checks at a liquor store, according to court records. Adams cashed more than $5.3 million worth of drug money checks at that liquor store between 2011 and 2017, the information states.
Tax forms
In 2013, Adams and “Individual A” agreed to start using tax forms to make their transactions appear legitimate, court records show.
The company owned by “Individual A” would issue Adams or MDA Property Services a form to report all payments -- both legitimate and those that were actually for drugs.
“Adams agreed to this, in part, because it would help make his income from selling narcotics appear like legitimate business income,” the information says.
Between tax years 2013 and 2016, Adams or his companies were issued 1099-MISC forms, but the amount of money reported on the forms was not correct, according to authorities.
The information alleges the amount of money reported was “less than the total actual amount paid by (the company owned by “Individual A”) to (Adams) and his business, but significantly more than the amount paid for legitimate work.”
Adams told his tax preparer to use his business bank records to calculate the gross receipts, rather than using the information reported on the tax forms, court records say. He knew that the bank records didn’t show all of the money he made from the drug sales, officials said.
“By directing his tax preparer to use his business’ bank records to prepare MDA Property Services’ forms, Adams caused his tax preparer to prepare false tax returns for MDA Property Services and false individual tax returns for himself for tax years 2013 through 2016,” the information reads.
IRS audit
Adams and MDA Property Services were audited by the IRS in 2017, and Adams is accused of making false statements to a revenue agent.
He told the agent that he did not cash checks or fail to report income that MDA Property Services had received from the company owned by “Individual A,” according to authorities.
When he was confronted about his check cashing activity, Adams claimed he had cashed checks as a favor to “Individual A” to give “Individual A” cash to use for sports gambling.
Adams never gave “Individual A” money for sports gambling, according to the information.
Officials said Adams claimed that 90% of the money paid to MDA Property Services was for legitimate work, but in reality, only about 3% of the money from 2013-2017 was for legitimate work, court records show.
Charges
The information accuses Adams on two counts.
He’s accused of “knowingly engaging in a monetary transaction, in and affecting interstate commerce, in criminally derived property of a value greater than $10,000 that was derived from a specified unlawful activity.”
Count two accuses him of “corruptly endeavoring to obstruct and impede the due administration of the internal revenue laws by making false statements to an internal revenue agent who was conducting an audit of his personal and business’ tax returns.”
The second charge concerns MDA Property Services’ financial practices and tax returns, his check cashing activity, and the purpose of his cash cashing activity, the information says.