Richard Joseph Salon owners sentenced to 3 years in prison - WSFA.com Montgomery Alabama news.

Richard Joseph Salon owners sentenced to 3 years in prison

L-R: Timothy Brown and Richard Joseph Smith. Source: Anonymous to WBRC L-R: Timothy Brown and Richard Joseph Smith. Source: Anonymous to WBRC
BIRMINGHAM, AL (WBRC) -

Richard Joseph Smith and Timothy Brown, the owners of Richard Joseph SalonSpa in Birmingham, have each been sentenced to 36 months in prison.

Prosecutors had requested a sentence of 46 months.

Smith and Brown pleaded guilty in May to tax fraud conspiracy in which they withheld employee taxes for more than 100 salon workers.

Prosecutors say the pair kept the money to finance their luxurious lifestyle, which included a million dollar home, a beach house, expensive cars, antique furniture and a Steinway piano.

Smith and Brown employed four full-time workers to take care of their 12 dogs and their home in Hoover's Preserve, according to prosecutors.

Over the years, they bought luxury vehicles including three BMWs and two Mini Coopers for more than $292,000.

Prosecutors said for seven years, these men led their employees to believe their taxes were handled.

Tonya Jones, a former employee, addressed the court and said she was employed from 2004 to 2009.

She noticed on her taxes the Social Security part said $0.00. Jones said she has no idea what her financial future will be.

Jones asked the judge to impose the sentence the prosecutors recommended.

Jones is now a salon owner and she has hired former Richard Joseph SalonSpa employees and they have trust issues. She has to continually reassure them their taxes will be paid.

The prosecutor went on to say in 2006 Brown collected a $300,000 tax deficit which still exists.

The IRS took out a lien on their home so when/if they sell it, that debt will be paid off first before the remainder goes toward restitution.

The prosecutor says defendants have known since December 2013 about their tax problems but they have made no effort to pay restitution in the past nine months.

Smith and Brown have been ordered to pay $1.4 million in restitution, with interest, to more than 100 victims listed in court documents.

Smith and Brown will be out on bond before they report to prison in two months.

Smith will go to medical facility in the southeast, possibly Kentucky or North Carolina, due to his health conditions, which include rectal cancer, a colostomy and a reversal colostomy.

Brown will go to a facility near Huntsville because that's where his ailing mother is located.

After they're released from prison, they will serve three years of supervised release.

Per court agreement, Smith and Brown have agreed to sell the Inverness salon and that money will go towards paying the $1.4 million in restitution.

The two paid partial taxes totaling $39,000 in 2013 and that will also go towards restitution.

In court on Tuesday, Brown's attorney Richard Jaffee motioned that Brown's sentence should be reduced because he was in the mitigating/subservient role and was a partner in the business in name only.

However, prosecutors referred to Exhibit 13, showing letters from employees that identified Brown and Smith both as their employers.

Brown issued the weekly paychecks and W2 forms that had inaccurate information. He was an integral part of the payroll process, which is what this entire case is based on.

Brown also had the Quickbooks accounting software on his computer. Brown's attorney disputed and said that Brown only punched buttons on Quickbooks that Smith set up.

Prosecutors then argued with Exhibit 9, a finance application for a car Brown purchased in September 2013 in which he identified himself on the application as a business manager making $130,000 a year.

The judge overruled the motion that Brown served in a subservient role.

Smith's attorney argued his client should only get years of probation and two years home confinement and if any prison time it should only be 60 days.

Brown's attorney argued his client should only get 30 to 60 days in prison.

But the judge Smith and Brown fall into a Level 23 category with a Criminal History 1, meaning they should have fallen under sentencing guidelines that required 46-57 months in prison, one to three years of probation, fines up to $100,000, plus restitution.

Both Smith and Brown spoke at their sentencing.

Smith said he felt it was important for the judge to hear from him directly. He apologized to employees, family and friends, saying he regrets it. He said it will not happen in the future and he wants to make it right.

Brown stated that he regrets the hardships on the staff and said he would do what he could to rectfy the situation.

Copyright 2014 WBRC. All rights reserved.

Powered by Frankly