Eagle man who owned Xpress Flex and Payroll America sentenced for fraud

Statesman staffMay 8, 2013 

A former Eagle resident accused of bilking employees of the Boise School District and other employers out of nearly $1 million from flexible spending accounts will serve at least 51 months in prison, a federal judge in Boise has ruled.

Michael Wayne Davis also was ordered to pay $954,640 in restitution to victims of Xpress Flex, the Boise company he owned and operated. According to court documents, that’s the amount he misappropriated from Xpress Flex client funds and used to pay personal credit card charges and the business expenses of his other company, Payroll America, Inc.

He faced 20 charges but agreed last fall to plead guilty to one count of wire fraud and one count of filing a false tax return. Each charge carried a maximum possible sentence of 23 years.

Idaho U.S. District Court Judge Lynn Winmill sentenced Davis on Jan. 9. His prison sentence will be followed by three years of supervised release.

Payroll America provided payroll administration and payroll tax filing services to employer-clients who deposited funds with that Davis-owned company. The company would pay those expenses when they came due. According to court documents, in March and April 2007, Davis misappropriated $2 million of those employer-client funds, wired them into his E*Trade brokerage account, and then invested the funds in the stock market. Davis’ E*Trade investments generated approximately $192,436 in capital gains income, which Davis wired to the personal checking account he shared with his wife, according to court documents.

The IRS reports that Davis intentionally failed to report capital gains income from E*Trade investments on his 2007 or 2008 tax returns, causing a tax loss of $45,290.

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