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Federal Contractor Jailed in $684,000 Motor Fuel Tax-Evasion Scam

Samuel Yakobowicz, owner of Twenty-Four Hour Fuel Corporation of Brooklyn, NY, was ordered by a U.S. District Court judge in Brooklyn to pay $750,000 in restitution and spend five years and five months in prison for his role in a motor fuel tax evasion scam where he filed false tax returns and obstructed an IRS audit. Yakobowicz who sold fuel under contract to the Long Island Railroad, an FTA-subgrantee, evaded paying $684,318 in excise tax on more than 2.8 million gallons of fuel. He fraudulently obtained refunds of IRS excise taxes by making it appear that diesel fuel sold to gas stations had been sold to the tax-exempt railroad. In addition, on numerous occasions, rather than delivering diesel fuel—which is taxed—to the railroad, he delivered untaxed home heating oil instead, falsely recorded on delivery tickets that he had supplied diesel fuel, applied to the IRS for refunds of fuel excise taxes he had not paid, and then pocketed the refunds. Yakobowicz was found guilty in September. The case was investigated by the IRS and OIG.