Feds: Kentucky businessman withheld payroll taxes from employees but didn’t pay IRS

The owner of a business in Southern Kentucky that provided services to people with intellectual disabilities failed to pay the government more than $250,000 deducted from employees’ paychecks, according to a federal charge.

Ace R. Jones II, 44, pleaded guilty Monday in federal court to one charge.

Jones owned and operated a business in Somerset called Cumberland Behavior Group LLC, which had about 50 employees between 2017 and 2019, according to the court record.

The business operated houses where employees looked after people with intellectual disabilities, according to a document in a separate bankruptcy case.

In five different reporting periods in 2017, 2018 and 2019, Cumberland Behavior Group withheld a total of $259,648 in federal income, Social Security and Medicare taxes from employees’ checks, but didn’t remit the money to the Internal Revenue Service, according to Jones’ plea agreement.

During that time, Jones caused Cumberland to spend thousands of dollars for his benefit or to promote the business, the plea agreement said.

Jones’ attorney in the bankruptcy case said Cumberland Behavior Group started having financial trouble because of changes in state Medicaid policy that caused delays in payments to the business.

However, the U.S. Trustee alleged in a challenge to the bankruptcy that Jones and a partner had “grossly mismanaged” the business, paying large salaries to Jones and others while failing to pay taxes.

The charge against Jones is punishable by up to five years in prison.