Tax Talk

Unscrupulous Payroll Company Owner Steals, Borrows, Then Steals Again!

Kathryn Cunningham, the owner of Moresource, a payroll services company, was indicted for fraud and embezzlement.

Cunningham’s company provided payroll services for 141 clients when it closed its doors in 2020. Her services included collecting payroll taxes from her clients and paying them over to the appropriate federal and state agencies. While running the company, Cunningham embezzled $1,545,427 from 24 clients. She used the funds for personal benefit as well as to fund her company’s operations.

Cunningham borrowed money on multiple occasions to pay for shortfalls in client accounts and then used client funds to pay the principal and interest on the loans.

Eventually, Cunningham could no longer rob Peter to pay Paul and stopped making payments to the IRS on behalf of her clients. When her clients began receiving notices from the IRS about the missed payments, she sent them false documents that stated their taxes were paid on time, claimed the IRS was behind in processing tax payments, had misapplied tax payments, and later blamed her company’s payroll software.

She faces a lengthy prison sentence in addition to restitution.

Mark Diehl is the founder and president of Diehl CPA LLC and a Certified Public Accountant licensed in Alaska. He has a Bachelor of Science and a Master of Science degree in Accounting from Western Governors University. Mark has previously worked with the Minnesota Department of Revenue as a tax auditor, so he knows the audit process very well. Diehl CPA is Alaska's expert in Tax Negotiation and Mediation.