Spencer Carrado, owner of Spectrum Med Spa, pleaded guilty to a federal employment tax crime involving $600,000 in payroll taxes.
DENVER, CO – October 15, 2026 (STL.News) Medical Spa – A Colorado medical spa business owner pleaded guilty to a federal employment tax crime after failing to turn over more than $600,000 in payroll taxes to the Internal Revenue Service, the U.S. Department of Justice announced.
Spencer Carrado, a resident of Parker, Colorado, pleaded guilty on October 2, 2026, to one count of willfully failing to account for and pay trust fund taxes. The guilty plea followed an investigation into employment tax obligations associated with Spectrum Med Spa, a business also operating under the name SculptedMD.
Federal prosecutors said Carrado withheld required federal taxes from employees’ wages but failed to deliver those funds to the IRS from 2020 through 2024.
The case highlights the serious criminal consequences business owners can face when they deduct payroll taxes from employees’ earnings but fail to pay them to the federal government.
Carrado is scheduled to be sentenced on December 11, 2026, and faces a maximum statutory penalty of five years in federal prison.
Medical Spa Owner Controlled Business Finances
According to the Justice Department, Carrado owned and operated Spectrum Med Spa, also known as SculptedMD, which operated at multiple locations.
As owner and operator, Carrado controlled the company’s financial affairs, including employee payroll and federal employment tax compliance.
Those responsibilities included withholding federal income taxes, Social Security taxes, and Medicare taxes from employee wages.
Employers generally must deposit withheld taxes with the federal government and file employment tax returns documenting their payroll obligations.
However, prosecutors said Carrado failed to fulfill those obligations over multiple years.
From the third quarter of 2020 through the fourth quarter of 2024, Carrado withheld employment taxes from workers’ wages but did not pay the required amounts to the IRS.
Federal authorities also said he failed to file all required quarterly employment tax returns during the period.
The Justice Department reported that his conduct resulted in a federal tax loss exceeding $600,000.
The announcement did not provide a detailed annual breakdown of the unpaid taxes or identify the exact number of employees affected.
More Than Four Years of Payroll Tax Violations
The employment tax violations federal prosecutors described covered about four and a half years, beginning in July 2020 and continuing through December 2024.
That period included the COVID-19 pandemic, subsequent economic recovery, and a time when businesses across the United States experienced changing labor costs and operating conditions.
However, the Justice Department did not attribute Carrado’s conduct to pandemic-related financial pressures or other specific business difficulties.
The central issue in the prosecution was his willful failure to pay employment taxes that employers had already withheld from employees’ wages.
Under federal tax law, employers act as intermediaries between their employees and the government when collecting payroll taxes.
When employees receive their paychecks, employers have already deducted certain federal taxes from their gross earnings.
Those deductions create an obligation for the employer to transfer the withheld funds to the government.
Failing to do so can result in civil penalties, financial liability, and, when the legal requirements for criminal prosecution are met, federal criminal charges.
Why Payroll Tax Withholding Is a Federal Crime
Employment tax violations are taken seriously because the money involved includes funds employees pay to the federal government.
Federal income tax withholding is intended to satisfy part of an employee’s annual federal income tax obligation.
Social Security and Medicare withholding helps finance federal retirement, disability, and health insurance programs.
Employers generally must account for these deductions, make timely deposits, and submit required tax returns.
The withheld portion of certain employment taxes is commonly referred to as trust fund taxes because employers hold those funds for the United States.
These funds are not ordinary business revenue available for unrestricted spending.
When a business fails to remit withheld payroll taxes, it may create substantial liabilities even if employees received their net wages.
Federal law distinguishes between businesses that encounter tax compliance problems and individuals who willfully violate employment tax obligations.
In criminal cases involving willful failure to collect, account for, or pay over employment taxes, prosecutors must establish the elements of the applicable federal offense.
Carrado’s guilty plea resolves his guilt on the count to which he pleaded, although the court has not yet imposed a sentence.
Guilty Plea Carries Potential Prison Sentence
Carrado pleaded guilty to one count of willful failure to account for and pay over trust fund taxes.
The offense carries a maximum statutory sentence of five years in federal prison.
However, the maximum penalty does not mean Carrado will necessarily receive a five-year sentence.
A federal district court judge will determine the appropriate punishment after considering the U.S. Sentencing Guidelines and other applicable statutory factors.
The sentencing process may consider the financial loss, the defendant’s conduct, relevant circumstances, and information presented to the court.
Carrado’s sentencing is scheduled for December 11, 2026.
The Justice Department’s announcement did not identify a final restitution amount or disclose whether it had recovered any portion of the unpaid employment taxes.
Those matters should not be confused with the reported tax loss, which exceeds $600,000.
IRS Criminal Investigation Examines Employment Tax Crimes
IRS Criminal Investigation is investigating the case.
The agency is responsible for investigating potential criminal violations of federal tax laws and certain other financial crimes.
Employment tax investigations can involve reviewing payroll records, bank transactions, tax filings, and business financial documents to determine whether withheld taxes were properly reported and deposited.
Business owners and other responsible individuals may face criminal exposure when evidence shows they willfully failed to meet their legal obligations.
In Carrado’s case, the Justice Department identified his control over SculptedMD’s financial affairs and his responsibility for payroll tax withholding and payment as central facts.
The department did not publicly describe the specific investigative techniques used in this prosecution.
Trial Attorney Stuart A. Wexler of the Justice Department’s Criminal Division Tax Section is prosecuting the case.
Assistant Attorney General Colin McDonald of the department’s National Fraud Enforcement Division announced the guilty plea.
Federal Government Emphasizes Fraud Enforcement
The prosecution came during a period when the Justice Department has placed increased public emphasis on fraud investigations and enforcement.
In its October 14 announcement, the department referenced creating its Fraud Division on April 7 and described broader efforts to investigate and prosecute fraud against the federal government and the public.
The department also connected its enforcement priorities to the federal government’s broader initiative targeting fraud, waste, and abuse.
Employment tax prosecutions represent one part of federal financial crime enforcement.
Unlike cases involving false personal income tax returns, employment tax prosecutions may concern money employers must deduct from workers’ wages and remit.
That distinction is important because employees generally do not control whether their employers make the required deposits after withholding taxes from their compensation.
Employers and other individuals with the relevant legal duties are responsible for collecting, reporting, and remitting those amounts.
The Carrado case illustrates how failures in routine payroll administration can lead to significant federal criminal proceedings.
What Business Owners Should Understand About Payroll Taxes
The guilty plea also reminds businesses of all sizes and industries that employment tax obligations apply.
Medical spas, restaurants, retail establishments, construction companies, professional services firms, and other employers generally must comply with federal payroll withholding requirements.
Businesses typically must calculate applicable withholding amounts, deposit employment taxes according to IRS schedules, and file periodic employment tax returns.
Many employers use Form 941, the Employer’s Quarterly Federal Tax Return, to report federal income tax withholding and Social Security and Medicare taxes.
Depending on the employer’s circumstances, other forms or deposit requirements may apply.
A business experiencing financial difficulties cannot simply treat withheld employee taxes as unrestricted operating funds.
Employers that fail to make required deposits may face penalties and interest, while responsible individuals can face additional consequences under federal law.
The IRS also has civil enforcement mechanisms for certain unpaid trust fund taxes, including the Trust Fund Recovery Penalty.
That civil penalty is distinct from criminal prosecution, although both address failures involving taxes employers must collect and remit.
Not every late payment or payroll tax error constitutes a criminal offense. Criminal liability depends on the applicable law, the evidence, and whether the required elements, including willfulness, are established.
Sentencing Scheduled for December
Carrado’s case will next proceed to sentencing, currently scheduled for December 11, 2026.
The court will determine whether a prison sentence, financial penalties, or other authorized consequences are appropriate under federal law.
The Justice Department has not announced the final disposition of any outstanding tax liabilities associated with Spectrum Med Spa or SculptedMD.
It also has not stated whether the business continues to operate.
For now, the confirmed outcome is Carrado’s guilty plea to one federal employment tax offense involving more than $600,000 in tax losses.
The prosecution underscores a fundamental requirement of the federal payroll tax system: Employers that withhold taxes from workers’ earnings must properly account for those funds and pay them to the government.
Failing to meet that obligation can carry consequences far beyond unpaid taxes, including criminal conviction and possible imprisonment.
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