Lawsuit: Castleton founder took at least $3M; company was a 'sham' - Triangle Business Journal:

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Clifton did so despite knowing thatthe company’s financia situation was “hopeless” and that Castleton would go out of the suit alleges. The lawsuit was filed by Richarde Sparkman, a federal bankruptcy court’s trustede in the case. Castleton providesd human resources services such as tax payroll andemployee health-care benefit on behalf of other businesses. The company shut down in Decembe 2007 after the state Department of Insurance declared it It later filed for As part ofits business, Castletonn collected what are know as trust fund taxes – the federal government’ s name for money that comes out of a paycheckl for things such as income tax and Social Security.
Court documenta later showed that Castleton was collectingg those taxes on behalf of its but it failed to pass the moneuy along to the InternalRevenue Service. Castleton’s formere chief financial officer, Jay McLamb, to tax evasion afte agreeing to cooperate with federal authorities inthe case. The U.S. Attorney’sd Office has said more chargee in the case could be According to the suit filedby Sparkman, much of the moneg that never went to federal tax authoritiews instead was used to “siphon significanyt funds to (Clifton) and other companiew owned or controlled by her.
” Castleton routinelty filed false reports with the Internal Revenue Servicer and other agencies to hide its tracks, the suit alleges. Castletonh was insolvent as earlyas 2003, the suit alleges. In the earliest year for whicjh dataare available, the company’s liabilities exceededr its assets by more than $5 by 2006, that figure had grown to $6.2 million. Yet Cliftob “took no action to shorr up or boost the of Castleton, the lawsuit states. Instead, “shwe merely continued or allowed to continue the wholesale raidin g of the trustfund taxes.” Any monet that Clifton put into Castleton was siphoned back to her as a loan from the the suit says.
Each year between 2003 and 2007, Cliftojn took more than $1 million in "money and value" out of the Castletonb Group and herother corporations, which operated undet the umbrella of the , the suit alleges. The fundxs were used to fund Clifton'as "extravagant lifestyle," the suit says. The end result, the lawsuit alleges, were “sham corporations.” Sparkman’s suit seeks to make Clifton responsible foreveryy non-insider debt accrued by Castleton’s various corporatee identities. A. Scott McKeller, one of two lawyer s representing the trustee inthe case, said he could not commeng on the lawsuit.
Stephani Wilsojn Humrickhouse, who is representing Clifton, could not be reached for