Raleigh co-owner of car dealership pleads guilty in ‘blatant’ $300,000+ tax fraud scheme, officials say

DURHAM, N.C. (WNCN) — A 60-year-old Raleigh woman accused of pocketing money from employee paychecks for five years pleaded guilty to tax fraud on Tuesday.

Carol Jean Darrow, 60, is currently listed as the co-owner and office manager of The Auto Finders Inc., a used car dealership in Durham. According to U.S. Attorney Michael Easley, Darrow managed the finances for the business, including the submission of payroll taxes and approving payments to creditors.

Specifically, the U.S. Department of Justice said they found that the dealership had failed to pay $346,775 in withheld employee payroll taxes.

In her about section on the dealership’s website , titled “The Good Guys,” it says Darrow joined the auto industry part-time initially in an effort to help her husband, Michael Darrow, “build” the business. It later turned into a full-time management position.

“For five years, this auto dealer took money from their employees’ paychecks, supposedly for taxes, and then pocketed it for themselves,” said Easley. “Blatant fraud like this undermines faith in our system, and we won’t allow it in North Carolina.”

Between 2016 and 2021, the dealership “continuously failed to meet its payroll tax obligations to the IRS,” which resulted in the substantial tax underpayment, officials said. These obligations included making periodic deposits to the Internal Revenue Service for payroll taxes as well as filing a quarterly return document to accurately account for employee compensation and tax payments made.

After her guilty plea Tuesday, Darrow is set to face a judge later this year for sentencing, at which time she could face up to five years in prison, according to Easley.

The IRS Criminal Investigations division is leading the investigation and Assistant U.S. Attorney Ethan Ontjes is the lead prosecutor on the case.

For the latest news, weather, sports, and streaming video, head to FOX8 WGHP.