'State Senate candidate said to owe taxes, child support'

Last modified: 8/23/2012 12:00:00 AM

State Senate candidate Joshua Youssef of Laconia owes the IRS nearly $50,000 in unpaid taxes, late fees and interest, according to court records. And Youssef has under-reported his total earnings to family court officials trying to determine his child support obligations, according to a judge's order.

Youssef declined yesterday to comment on the court's order, saying he considered it a confidential matter. Asked whether voters had a right to know about his personal financial management given his run for elected office, Youssef said voters could contact him personally with questions.

"The people who read your newspaper aren't usually my voters anyway," Youssef said.

The court has been trying to recalculate Youssef's child support payments for his 8-year-old son since 2009, when his ex-wife told the court Youssef had not disclosed all of his income.

Youssef has been paying nearly $700 a month in child support regularly since the divorce was finalized in 2006 but is fighting efforts to increase the amount. He also discontinued his son's health insurance coverage, and the boy is now insured by the state's Healthy Kids program, according to court records.

In the court's most recent calculation, Laconia district court Judge James Carroll ruled in March that Youssef was using his computer repair company, Same Day Computer, to mask his true income from his ex-wife and the court.

After reviewing Youssef's financial records produced by Youssef under court order, Carroll concluded Youssef's annual income was $71,367. Carroll rejected Youssef's claim that he could afford only $653 a month and ordered Youssef to pay $1,155 a month instead.

Youssef's "formulations of . . . child support would be inadequate to meet even (his ex-wife's) minimal expenses related to caring for and raising the child," Carroll wrote, "and would not adequately reflect the standard of living that (Youssef) enjoys by using his company to shield his income."

In his ruling, Carroll noted that Youssef bought a Gilford home in a foreclosure sale this year for $65,627. Carroll wrote that it was "particularly disingenuous" of Youssef to claim financial limitations given that purchase.

Youssef's IRS debt has also become part of the divorce case because Youssef has cited it as a "financial hardship" and justification for reducing his child support obligation, according to court records.

The debt has been building since at least 2005, according to court motions filed by Ed Mosca, the attorney for Youssef's ex-wife, Bethany Youssef. Joshua Youssef, who is self-employed, did not pay income taxes between at least 2005 and 2009, according to those motions.

The IRS is now collecting the debt by garnishing Youssef's wages, according to court records.

Youssef, a 36-year-old Republican from Laconia, is running for state Senate in District 7, which includes Franklin, Laconia, Belmont, Canterbury, Boscawen, Northfield, Salisbury, Webster, Gilford and Andover.

He will face Republican William Grimm from Franklin in the Sept. 11 primary. Democrat Andrew Hosmer of Laconia is also seeking the seat.

The Youssefs married in 2003 and were divorced 2½ years later. Their divorce has been contentious, particularly since Bethany Youssef asked the court in 2009 to recalculate her ex-husband's child support payments.

The case has been fought not only in court but also in the Legislature, before the House Redress of Grievances Committee. On Youssef's testimony alone, the committee voted 8-2 in July to investigate impeachment proceedings against three judges Youssef said had mishandled his divorce case.

Carroll, who is relatively new to the case, was not included in that petition.

Reached yesterday by telephone, Youssef said he is challenging Carroll's ruling and child support calculations. He declined to comment further on the ruling because his request for reconsideration is still pending.

"The only thing I am using my company for is to create jobs," Youssef said.

He declined to say yesterday how many jobs he has created at his company, which is headquartered in Laconia and has at least three franchise locations elsewhere in the state.

Asked how many people work for him, Youssef said "more than one and less than 10." On his campaign website, joshfornh.com, Youssef describes his company as "the largest computer repair and upgrade franchise system in the Northeast."

Youssef also objected yesterday to the Monitor's interest in his financial matters.

"I don't think my income is relevant to my campaign whatsoever," Youssef said. "What is relevant to my campaign is creating a business-friendly climate so that we can create products and services so that we can employ people and people can enjoy a better quality of life in New Hampshire."

Following the phone interview, Youssef emailed the Monitor a comment on his tax debt and requested that his comment be used in full.

"Because of my divorce as well as the complicated nature of taxes on the self-employed business-owner, I encountered some unforeseen tax liabilities," Youssef wrote. "Unfortunately, this is not uncommon to business owners. I have worked with the IRS to resolve these problems and I am moving forward. (My business) has future plans to expand . . . in District 7 and beyond and to create more jobs and business opportunities."

Carroll issued a second ruling in May ordering Youssef and his ex-wife to attempt to mediate their differences. Mosca, Bethany Youssef's attorney, said yesterday he cannot attempt mediation until Joshua Youssef produces the remaining financial records he has requested.

In June, Carroll issued a third order telling Youssef to produce the financial documents. Youssef objected, and Carroll issued another order last month again telling Youssef to provide Mosca the records.

Youssef declined to discuss those records yesterday. "The lowest level trial judge," Youssef said, referring to Carroll, "has made an initial finding of fact that has been contested and is the subject of ongoing litigation."

When asked whether he will seek impeachment action against Carroll from the House Redress of Grievances Committee, Youssef said, "I'm not commenting on that."

Carroll made clear in his May order that he's found this divorce case challenging. "The extended litigation has created the level of animosity between the parties which is of great concern to the court," he wrote.

He's also found assessing Youssef's true income difficult, according to his March order.

• Youssef said his company's locations outside of Laconia are franchises that he sold for $5,000 in one case, according to court records. He is also entitled to royalties based on the franchise's sales. But he has not reported any income from those franchises or told the court how much they are earning, according to court records.

• Youssef's personal bank account shows a monthly income of about $1,505, reflecting a wage of $8.75 an hour, Carroll wrote. He pays his child support from this account. "It is not what the checking account evidences but, moreover, what the account does not evidence," Carroll wrote.

There are no payments for the expenses Youssef has claimed he has, including his mortgage, utility bills, heating oil or gasoline purchases or insurance. Those are instead paid by the company, Carroll wrote, and not reported as income by Youssef.

• Youssef has also been inconsistent in how he claims tax benefits for his Lexus, Carroll wrote. At times he has said it is only a business vehicle. But he has also claimed it as a personal expense.

"(Youssef), apparently, utilizes the liability equation at the time it is most meaningful for the application," Carroll wrote. "In court, it is a personal tax liability; and as to the IRS, it is 100 percent depreciation value for the company tax purposes."

Carroll continued: "Such contradictions and the other circumstances cited above raise serious issues as to the validity of (Youssef') income reported in his financial affidavit."

(Annmarie Timmins can be reached at 369-3323, atimmins@cmonitor.com or on Twitter @annmarietimmins.)'

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