A Sierra Vista payroll service company was sued last week by a client for allegedly embezzling nearly $150,000 which was supposed to pay the client’s federal and state payroll taxes, and the company’s owner is the subject of two criminal investigations, the Arizona Daily Independent has confirmed.
Daystar Payroll LLC and its owner Patricia Bowman are defendants in a civil complaint filed March 23 by Canyon State Wireless (CSW). The seven-count lawsuit seeks monetary damages based on allegations of fraud and breach of fiduciary duty for not submitting $146,020 of Canyon State’s funds to the Internal Revenue Service and the Arizona Department of Revenue.
In addition to the civil action, Bowman is the subject of an ongoing criminal investigation led by Det. John Papatrefon of the Sierra Vista Police Department. The investigation involves Canyon State and three other Daystar clients, although details about the other clients have not been made public.
Court records show Papatrefon interviewed Bowman last month and purportedly admitted to mishandling Canyon State’s funds. It’s unclear whether she had an attorney present. No criminal charges have been filed as of April 1.
According to Canyon State’s lawsuit, Daystar Payroll was contracted by the company in 2013 to handle payroll operations, which included calculating employee wages and taxes, completing the required forms, and making the necessary payments once Canyon State transferred the money to an account accessible to Daystar.
Canyon State claims that in late 2017, an IRS notice brought attention to the fact that the company owed nearly $75,000 for six quarters of federal payroll and withholding taxes, even though that money had been accessed by someone on behalf of Daystar.
When Bowman was asked about the IRS notice, she purportedly provided Canyon State with fraudulent receipts showing the disputed payments had been made. The IRS is now investigating those actions as well, the lawsuit states.
Meanwhile, Canyon State was audited by the Arizona Department of Revenue which found that nearly $73,000 was due for the company’s Arizona withholding taxes for 2014 through 2017.
“When asked about this, Defendants provided copies of purported ADOR withholding tax reports and claimed they had filed the Arizona withholding tax reports for the aforementioned years and that Defendants had paid all related withholding taxes,” the lawsuit states.
However, Canyon State says ADOR had no record of the payments or reports because Bowman or her company “converted and/or embezzled” the funds. Canyon State is seeking punitive damages of three times its general damages.
Bowman, who is also known as Trish, has owned Daystar Payroll since 2006, according to the company’s website. Efforts to reach Bowman were unsuccessful as Daystar’s phone has been disconnected and no one was at the office space she rented at an office park near State Route 90 and Toscanini Avenue.
Anyone with information about alleged irregularities by Bowman or Daystar is asked to call Papatrefon at 520-452-7500.
Canyon State’s case has been assigned to Judge Laura Cardinal of the Cochise County Superior Court. Daystar and Bowman will have until late April to file their answers to the lawsuit.