5 Orlando Residents Indicted for Construction Fraud Schemes

There is a lot of fraud in the construction industry. Recently, five Orlando residents were charged with fraud. All five, ranging in age from 44 to 56 years old, have been charged with conspiracy to commit wire fraud and conspiracy to commit tax fraud. Each wire fraud count carries a maximum penalty of 20 years in federal prison and each tax fraud count carries a maximum penalty of 5 years in prison.

The United States intends to seek forfeiture of a total of at least $19 million as well as five properties located in Orlando, which were purchased with proceeds of the alleged wire fraud offenses. The defendants established companies that claimed to supply labor for construction contractors.

Under Florida law, businesses that engage in construction work are required to have workers’ compensation insurance. The defendants did apply for workers’ compensation insurance policies to cover several employees with minimal payroll. The defendants then entered into agreements with construction work crews, primarily undocumented aliens, and then falsely claimed that the workers were the companies’ employees. The workers then performed construction work for the contractors.

The contractors wrote payroll checks to the defendants’ companies and the checks were deposited into bank accounts in the name of the defendants’ companies. The defendants withdrew cash and wrote checks for the workers’ pay and provided the cash and checks to the work crew leaders. But first the defendants deducted a 6% to 8% fee for their services. This method of funneling payroll allowed the contractors and the work crews to avoid responsibility for payroll taxes while ensuring that adequate workers’ compensation insurance was provided.

Throughout the alleged conspiracy, the defendants deposited more than 46,000 payroll checks totaling more than $292 million. The defendants kept more than $19 million in fees. No one remitted payroll taxes, such as Social Security, Medicare, and federal income tax, to the IRS. The unpaid taxes on the payroll amounted to more than $52 million.

The defendants also did not pay the full amount of workers’ compensation insurance companies that they were supposed to pay. The insurance company would have charged additional premiums totaling at least $28 million based on all the payroll.

This case was investigated by Homeland Security Investigations and the Internal Revenue Service, and the Florida Department of Financial Services. It is part of a continuing investigation on the use of shell companies and ghost employees in the construction industry, which is becoming a growing trend.

Contact Us Today

There’s a lot that can happen in the construction industry. There are a lot of legalities to contend with and some construction professionals take advantage of the system by engaging in fraud.

A Florida contractor representation lawyer from Linkhorst Law Firm can help you if you are being accused of a crime or are facing a legal issue. We are fully prepared to protect and promote your interests. To schedule a consultation, fill out the online form or call 561-626-8880.

Source:

justice.gov/usao-mdfl/pr/five-orlando-residents-indicted-scheme-facilitate-evasion-payroll-taxes-and-workers