Jose Molina-Herrera, a 27-year-old Honduran national, received a 27-month prison sentence today. He was found guilty of conspiring to commit wire fraud and conspiring to defraud the United States by impeding the Internal Revenue Service (IRS). The U.S. Attorney’s Office, Middle District of Florida, announced the sentencing.
According to the Department, Molina-Herrera has been ordered by the court to forfeit $867,005 in proceeds from the wire fraud offense and make a restitution payment of $3,558,579.42 to the IRS.
From 2019 to 2020, Molina-Herrera and his accomplices engaged in a conspiracy to pay construction workers “off the books” in order to evade workers’ compensation premiums and payroll taxes, according to the office’s statement.
He established a shell company called All National Remodeling LLC to distribute proof of insurance and provide cash payments to workers, according to the department.
Molina-Herrera issued certificates of liability insurance under the shell company, which contractors used as proof of coverage, in exchange for 6% to 8% of payroll, according to the U.S. attorney’s office.
The insurance policy, however, relied on a deceitful application that hid the workers’ true identity, tricking the insurer into losing over $2.2 million, as per the department’s report.
Molina-Herrera and his colleagues deposited checks into the accounts of the shell company and then withdrew cash to cover the payment of workers. This allowed them to bypass the process of withholding payroll taxes, as explained by the office.
According to officials from the IRS, the scheme enabled contractors to evade payroll taxes and bypass the verification of workers’ legal authorization to work in the U.S., resulting in over $14 million in untaxed payments.
“Using shell companies to pay workers under the table is not only illegal, it gives an unfair competitive advantage that businesses who do things the right way can’t match,” said Ron Loecker, Special Agent in Charge of IRS-Criminal Investigation’s Tampa Field Office.
“We will continue to investigate these schemes to ensure compliance with the law and return competitive balance to the industry.”