A woman who rose from wrenching poverty, abuse and foster care in Milwaukee to run a multimillion-dollar Brookfield business and make films has been sentenced to federal prison for withholding years of payroll taxes from the IRS.
Kimberly Zulkowski, 43, ignored IRS warnings about how she was handling taxes at Faith Family Services, a personal care agency, until she was charged in 2020 and agreed to plead guilty to willful failure to pay taxes, according to federal court records.
Zulkowski became widely known for her success story, efforts to address violence and films, including one named for where she grew up, the 53206 ZIP code in Milwaukee.
In addition to 15 months in prison, Zulkowski will serve three years of supervised release and be on the hook for more than $730,000 in restitution. US District Judge JP Stadtmueller imposed the sentence May 27.
At the hearing, veteran Milwaukee County Circuit Judge Christopher Foley testified as a character witness for Zulkowski. Officials announced the sentencing in news releases late Wednesday.
Prosecutors had sought a minimum two-year prison term.
“This defense has demonstrated a level of hubris on par with the most hardened
criminals sentenced by this Court,” Assistant US Attorney Kevin Knight wrote in a sentencing memo.
“She refused to comply with the IRS’s warnings; she refused to comply with the terms of her plea agreement; and she refused to comply with the rules governing PPP loans.”
Zulkowski’s attorney, Daniel Welytok, wrote that his client was “shocked and appalled by the prosecution’s demeaning description of her,” which cast her in an unfair light. He suggested probation, without any prison time, was the appropriate sentence.
“She has selflessly financed and assisted with the burial of murdered adults
and children who were victims of gun violence, and has spearheaded a number of
charitable organizations and activities” Welytok wrote.
Sentencing guidelines called for a prison term of 24 to 30 months. Zulkowski has no prior criminal record. In a request to postpone an earlier sentencing date, her attorney said Zulkowski is now living in the Los Angeles area. An address there listed for Zulkowski in a state court tax matter rents for about $11,000 a month.
House in Mexico, PPP loan
According to the government’s sentencing memo:
Faith Family Services had annual receipts of more than $5 million, and more than 150 employees. Zulkowski failed to pay federal payroll taxes from October 2014 to December 2016. From October 2014 to March 2017, she also failed to pay the matching portion of the company’s payroll taxes to the IRS.
The IRS issued warnings about the issue. Instead of paying the taxes, in 2017 and 2018 Zulkowski began moving about $1.5 million from her business to other accounts. She used some to buy a home in Mexico and subsidize film and theatrical productions, according to the government.
Zulkowski directed the 2018 film “53206: Milwaukee” and produced a 2016 film, “Grandma’s House.”
In February 2020, Zulkowski was charged and pleaded guilty to a single count of tax evasion. The next month, the coronavirus pandemic struck the US
In April, while awaiting sentencing, Zulkowski “continued to engage in financial misconduct,” according to the prosecution’s sentencing memo. She applied for a Paycheck Protection Program loan in April 2020, but was rejected.
The PPP loans were part of the Coronavirus Aid, Relief, and Economic Security Act, known as CARES.
In June 2020, she transferred Faith Family Services to Stephen Curtis, a romantic and business partner, and its name was changed to Faithful Hands PCA, LLC. In February 2021, Curtis applied for the PPP loan but was also rejected. He changed an answer on the form when he reapplied a week later and got $365,912 for Faithful Hands.
Curtis moved about $150,000 of the money to his and Zulkowski’s personal accounts, the sentencing memo said, and she then tried to use the money to pay restitution in her criminal tax case.
Knight’s memo goes on to say Zulkowski’s sentencing was postponed from last fall because she failed to fully disclose all financial records, which was a condition of her plea arrangement.
Defense view
“This Defendant has fully and promptly cooperated with the IRS and the US Attorneys’ Office every step of the way in this action, beginning well prior to the entry of her plea agreement,” Welytok wrote.
He argued the sale of Faith Family Services to Curtis was a legitimate sale of her business’ assets, for $127,854, to a new company Curtis started in 2019 and which was vetted by the state as a personal care agency.
When the new business, Faithful Hands, received the PPP loan money, Curtis was able to pay Zulkowski the agreed-to cost of Faith Family’s assets, and she tried to use those proceeds to meet her restitution obligation.
“Most any small business could have applied for a PPP loan,” Welytok wrote and “neither Defendant’s or Mr. Curtis’s PPP loan applications were in any way improper, illegal or misleading.”
To call Zulkowski’s background difficult is an understatement.
According to the defense memo, her addicted mother beat and prostituted her as a child. She and siblings lived in various abandoned houses without plumbing, heat or electricity until landing in foster care.
She became emancipated at 16, working to support herself and six siblings still in foster care. Over the years she has welcomed about 30 foster children to her own home.
Since her conviction in 2020, Zulkowski has divorced and moved to California. She currently cares for several children, both biological and nonbiological, including two infants.
Zulkowski was not taken into custody after the sentencing hearing. She must surrender to the federal Bureau of Prisons on July 1.
“Failure to pay over employment taxes taken from employee wages is a serious criminal offense,” said Justin Campbell, Special Agent in Charge, IRS Criminal Investigation Chicago Field Office.
“It not only harms the employee’s future Social Security and Medicare benefits, it’s also stealing from honest taxpayers and the United States Treasury,” Campbell said.
Contact Bruce Vielmetti at (414) 224-2187 or bvielmetti@jrn.com. Follow him on Twitter at @ProofHearsay.