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$200,000 In withheld payroll taxes stays a felony case
The Fourth Circuit said rFactr’s unpaid trust-fund taxes were not the company’s cash to spend, even after the business later tried to catch up. The decision leaves intact convictions based on five tax quarters in 2016 and 2017.
The federal Fourth Circuit left intact five felony convictions each for Gregory Gentner and Richard Brasser, two Charlotte business executives whose company withheld payroll taxes from employees’ wages but did not pass the money along. On May 28, 2026, the court said those trust-fund taxes are not part of a company’s cash to spend.
A jury in the Western District of North Carolina convicted each man in 2024 under 26 U.S.C. § 7202, the federal law that covers willful failure to pay over trust-fund taxes.
Money already spoken for
The case matters because withholding taxes from a paycheck does not make the money disappear. The amount taken out is supposed to reach the federal Treasury. When it does not, the problem is more than a bookkeeping miss. It can become a felony case.
For workers, the pay stub can look ordinary even when the money behind it is stuck in the wrong hands. The ruling reinforces a basic rule of payroll law: taxes withheld from wages already belong on the government side of the ledger. Employers and the people running them can face criminal exposure if they keep that money back.