Editor's note: Updated to include a statement from Chris Harrison's attorney.
A Fayetteville man pleaded guilty in federal court this week to failing to report to the IRS $25 million in income he allegedly embezzled from the company he worked for — some of which he spent on “bling" — according to the U.S. Attorney’s Office for the Eastern District of North Carolina.
Christopher Scott Harrison, 56, pleaded guilty Tuesday to a charge of willfully filing a false tax return. He faces up to three years in prison, restitution to the IRS and a potential fine when sentenced in the spring.
“This businessman tried to dodge paying millions in federal taxes by disguising personal luxuries as business expenses. Harrison diverted company funds to buy nearly a million dollars worth of bling, including an estimated $145,000 Rolex watch, $102,000 Cartier diamond necklace, and $85,000 Tiffany bracelet,” said U.S. Attorney Michael Easley in a news release.
According to the criminal information and evidence summarized in court, Harrison was CFO and majority owner of an insurance and human resources benefits business, EbenConcepts, the release said.
Beginning at least as early as 2012, "Harrison began to lavishly spend company funds for his own benefit, for example purchasing a watch for approximately $145,000 and spending approximately $300,000 of company funds for a swimming pool at his residence."
As these expenditures came to light, the release said, Harrison filed for Chapter 11 bankruptcy. During the bankruptcy proceedings, an accounting firm retained by the Bankruptcy Trustee discovered almost $25 million in personal expenditures attributable to Harrison reported as business expenses between tax years 2012 and 2018, the release said.
Harrison filed false personal returns over that period, which failed to report the income, leading to almost $6 million in uncollected federal income taxes, according to the U.S. Attorney's Office.
The allegations of wrongdoing against Harrison — which were perpetrated from 2011 to 2019 — were discovered after the U.S. Secret Service and the Internal Revenue Service began investigating the banking and credit card patterns of the company's comptroller in September 2019, according to a lawsuit filed in Harrison's bankruptcy by EbenConcepts owner Muzzy Bass of Dallas.
Harrison was fired from his $300,000-a-year job in October 2019. At the time, he was the company's majority shareholder, but Bass has since bought back the shares for $10, according to the lawsuit. Harrison had worked for the company in various capacities since 2002.
The lawsuit alleges that Harrison was aided in his scheme by the company's controller who would code expenditures Harrison made, such as a $137,000 Cartier necklace he gave to his wife, as legitimate business expenses. The lawsuit also alleged that even in filing for bankruptcy, Harrison intentionally failed to report property he possessed, like the Cartier necklace, some $2.5 million in jewelry and more than $3 million in American Express rewards he converted to gift cards.
The controller is accused in the lawsuit of embezzling $1.9 million from EbenConcepts, but it does not appear criminal charges have been filed.
Picking up the pieces
Senior Vice President David Smith said Thursday that Harrison's actions jeopardized the livelihoods of more than 100 people employed by EbenConcepts across four states. The misappropriated money came from the company's profits, he said.
"A lot of us were left to make sure the company survived," Smith said. "Our company is stronger and we survived because of our support from one another."
Owner Bass shared his feelings on Harrison's plea in a statement to the Observer.
“Chris’s admission of willfully committing a felony under federal law comes as no surprise given the evidence against him and affirms Chris’s abuse of his responsibility to our company and to the taxpayers. It supports what the Bankruptcy Court found last January after trial that Chris had committed embezzlement and fraud, and awarded me and my companies over $30 million in judgments," he said.
"(Tuesday's) admission of guilt is one more step in an effort for justice against someone I trusted and counted as my friend. I feel confident that there is much more to come to address his extensive bad acts.”
Harrison did not return a voicemail seeking comment left at a number registered to him Thursday.
On Friday, his attorney Ripley Rand sent the following message via email: "Mr. Harrison has accepted full responsibility for the tax charge in this case, and he is continuing to cooperate in the investigation.”
F.T. Norton can be reached at email@example.com
This article originally appeared on The Fayetteville Observer: Fayetteville man pleads guilty in multi-million dollar tax fraud