An illegal alien was sentenced in a multi-million dollar wire and tax fraud scheme in Florida.
United States District Judge Wendy W. Berger has sentenced 36-year-old Pablo Isila Euceda-Hernandez, a Honduran national illegally present in United States, to 27 months in federal prison for conspiracy to commit wire fraud and conspiracy to commit tax fraud. The court also ordered Euceda-Hernandez to pay restitution to the IRS in the amount of $1,214,508. The court also entered a money judgment against Euceda-Hernandez in the amount of $336,029, representing the proceeds of the wire fraud.
According to court documents, Euceda-Hernandez established a shell company that purported to be involved in the construction industry. Euceda-Hernandez obtained a workers’ compensation insurance policy in the name of the shell company to cover a minimal payroll for a few purported employees. He then “rented” the workers’ compensation insurance to work crews who had obtained subcontracts with construction contractors on projects in various Florida counties as well as contractors in other states.
He sent the contractors a certificate as “proof” that the work crews had workers’ compensation insurance, as required by Florida law. By sending the certificate, Euceda-Hernandez falsely represented that the work crews worked for the shell company. Over the course of the scheme, Euceda-Hernandez “rented” the certificates to dozens of work crews, defrauding the worker’s compensation carrier, typically allowing undocumented illegal workers to be employed unlawfully.
As part of the scheme, the contractors issued payroll checks for the workers’ wages to the shell companies and Euceda-Hernandez cashed these checks, then distributed the cash to the work crews after deducting their fee, which was typically about 6% of the payroll.
During the scheme, Euceda-Hernandez cashed payroll checks totaling approximately $5 million. Neither the shell company nor the contractors reported to government authorities the wages that were paid to the workers, nor did they pay either the employees’ or the employer’s portion of payroll taxes – including Social Security, Medicare, and federal income tax. According to the IRS, the amount of payroll taxes due on wages collected by Euceda-Hernandez totaled $1,214,508.
The scheme also facilitated the avoidance of the higher cost of obtaining adequate workers’ compensation insurance for the numerous workers on the work crews to whom Euceda-Hernandez “rented” the workers’ compensation insurance. The policy that Euceda-Hernandez purchased and then “rented” out was for an estimated payroll of $169,400 and the insurance company issued a policy for a premium of approximately $11,352. Had a workers’ compensation insurance policy been purchased for the actual payroll totaling approximately $5 million, the policy premium would have totaled approximately $591,978.
“Under-the-table cash payroll schemes, especially those designed to pay illegal immigrants not authorized to work in the United States, jeopardizes the integrity of the construction industry and undermines the legal framework intended to protect workers and ensure fair business through legal and ethical standards,” said Tim Hemker, Homeland Security Investigations (HSI) Jacksonville assistant special agent in charge. “HSI, through our strong law enforcement partnerships, is committed to uncovering the schemes of criminals and ensuring that justice is served for those who seek to exploit the system.”
“This defendant cheated. He cheated their employees, the U.S. taxpayers, and most importantly the free-market principles which govern our society,” said Ron Loecker, Special Agent in Charge of IRS-Criminal Investigation’s Tampa Field Office. “By breaking the law, Euceda-Hernandez sought an unfair advantage to all their competitors who played by the rules and will now contemplate their actions from prison. We want to ensure a level playing field for the business owners doing things the right way. To those who think they can get away with this type of behavior, no matter what steps you take to cover your tracks, we will find out, and do everything we can to bring you to justice.”
This case was investigated by Homeland Security Investigations, the Internal Revenue Service – Criminal Investigation, and the Florida Department of Financial Services. It was prosecuted by Assistant United States Attorney John Cannizzaro.
