A South Florida businessman who operated a network of healthcare companies has been sentenced to 18 months in federal prison for willfully failing to pay over more than $10 million in employment taxes and failing to file personal income tax returns, federal prosecutors announced Friday.
Paul Walczak, the owner and controller of several Florida-based healthcare entities, including Palm Health Partners and Palm Health Partners Employment Services (PHPES), was also sentenced to two years of supervised release and ordered to pay $4.38 million in restitution to the United States.
According to court documents, Walczak’s employment firm managed payroll for more than 600 employees and disbursed over $24 million annually in wages. As an employer, he was legally obligated to withhold Social Security, Medicare, and federal income taxes from workers’ paychecks and remit those funds—along with the employer’s share of payroll taxes—to the IRS on a quarterly basis.
Instead, over the course of more than a decade, Walczak repeatedly failed to meet his tax obligations. Beginning in 2011, he withheld taxes but did not pay them over to the IRS. Despite multiple attempts by the agency to bring him into compliance, including personal meetings and assessments, Walczak resumed the practice of diverting withheld taxes for his own benefit by the end of 2015.
Between 2016 and 2019, Walczak withheld more than $7.4 million from employee wages but failed to forward those funds to the IRS. During the same period, he also neglected to pay over $3.48 million in employer payroll taxes. Prosecutors said that instead of paying the IRS, Walczak used business funds to enrich himself—spending over $1 million on a yacht, transferring large sums to personal accounts, and shopping at luxury retailers including Bergdorf Goodman, Cartier, and Saks.
By 2019, the IRS had assessed millions in civil penalties against him. Walczak also stopped filing personal income tax returns starting in 2018, despite receiving a $360,000 salary from PHPES and taking $450,000 in transfers from his business accounts.
Prosecutors further revealed that Walczak established a new business in 2019, called NextEra, using a family member as the majority nominal owner to disguise his control. Through NextEra, Walczak funneled nearly $1.3 million into family members’ accounts and toward personal spending, including clothing and fishing gear.
In total, Walczak’s actions caused a tax loss of more than $10.9 million to the IRS.
The sentence was announced by U.S. Attorney Hayden P. O’Byrne of the Southern District of Florida, Acting Deputy Assistant Attorney General Karen E. Kelly of the Justice Department’s Tax Division, and IRS Criminal Investigation Miami Field Office Special Agent in Charge Emmanuel Gomez.
