- Paul Walczak, convicted of evading more than $10.9 million in payroll taxes, was pardoned by President Trump shortly after being sentenced to 18 months in prison.
- Walczak, son of prominent Republican donor Betsy Fago, used the funds for lavish personal expenses, including a $2 million yacht.
- Despite repaying the stolen taxes with assistance from his family, the judge emphasized that wealth shouldn't exempt individuals from consequences.
WEST PALM BEACH — Two weeks after a federal judge told the son of a wealthy socialite and business tycoon that his family’s money was not a "Get Out of Jail Free" card, a move by the White House suggested otherwise.
President Donald Trump pardoned Paul Walczak, a Palm Beach Gardens health care executive convicted of tax evasion for siphoning more than $10.9 million in payroll taxes from the paychecks of doctors and nurses. Prosecutors said he used the money to finance a lavish lifestyle and luxury goods, including a $2 million yacht.
During his April 11 sentencing hearing, U.S. District Judge Kenneth Marra said that letting Walczak walk free "reinforces the perception that the rich get away with it and the poor go to prison."
The judge sentenced him to 18 months in prison and gave Walczak 90 days to turn himself in. Only 12 of those days elapsed before Trump signed the private pardon.
Walczak is the son of Betsy Fago, a longtime Republican donor who once hosted a fundraiser at her Jupiter mansion where attendees circulated the stolen diary of Joe Biden's daughter, Ashley.
Paul Walczak withheld millions in employee taxes, used funds for personal purchases
Walczak controlled a network of health care companies including NuVista, Palm Health Partners, FW Healthcare Investors and PHP Employment Services, or PHPES. At its height, PHPES employed more than 600 people and managed a payroll of more than $6 million per quarter.
According to prosecutors, Walczak withheld more than $7.4 million in trust-fund taxes — Social Security, Medicare and federal income taxes — from health care employees in the network between 2016 and 2019. He also failed to pay $3.5 million in employer-side payroll taxes, bringing the total tax loss to more than $10.9 million.
Assistant U.S. Attorney Brian Flanagan said that rather than directing the money to the IRS, Walczak used it to sustain a life of luxury. He bought a yacht that cost more than $2 million, transferred hundreds of thousands to himself to supplement his $360,000 salary, and bought goods from Bergdorf Goodman, Cartier and Saks.
To sidestep the IRS's penalties assessed against him, he opened a new business in his daughter's name and continued to fund his personal expenses from those business accounts.
This wasn't a crime of desperation, Flanagan said. Walczak took $10 million in taxes from the government "simply because he wasn't getting rich enough."
Walczak's attorneys emphasized the financial sacrifices made by Walczak’s family to repay the stolen tax money. His wife of 30 years sold her engagement ring. His eldest daughter sold her car.
His mother, Fago — a health care entrepreneur who'd also been dinged by the IRS forskimping on payroll taxes— sold her $12.5 million Jupiter waterfront estate in the town's Admirals Cove community.
Walczak repaid the money he owed in federal payroll taxes, said defense attorney Dennis Kainen, and worked "really, really hard" to do it.
"I'm glad he did that, and I'm going to consider it," said Marra, appointed to the bench in 2002 by former president George W. Bush. "But it's just not a 'Get Out of Jail Free' card."
Hannah Phillips is a journalist covering public safety and criminal justice at The Palm Beach Post. You can reach her athphillips@pbpost.com.
