The U.S. Attorney’s Office, Middle District of Florida, has announced that 27-year-old Jose Molina-Herrera from Honduras has been sentenced to 27 months in federal prison. His charges include conspiracy to commit wire fraud and conspiracy to defraud the United States by impeding the Internal Revenue Service (IRS).
According to the Department, Molina-Herrera has been ordered by the court to forfeit $867,005 in proceeds from the wire fraud offense and to pay $3,558,579.42 in restitution to the IRS.
Molina-Herrera and others collaborated between 2019 and 2020 to illegally pay construction workers under the table, thereby evading workers’ compensation premiums and payroll taxes, according to the office.
All National Remodeling LLC was established by him as a shell company for the purpose of distributing proof of insurance and making cash payments to workers, according to the department.
The U.S. attorney’s office revealed that Molina-Herrera provided certificates of liability insurance through the shell company, allowing contractors to demonstrate their coverage. In return for 6% to 8% of payroll, Molina-Herrera carried out this fraudulent activity.
The insurance policy, however, was issued based on a fraudulent application that hid the true nature of the workers, resulting in the insurer being defrauded of over $2.2 million, as reported by the department.
According to the office, Molina-Herrera and others utilized the shell company’s accounts to deposit checks and withdraw cash for the purpose of paying workers. This method allowed them to bypass the process of withholding payroll taxes.
According to officials from the IRS, the scheme enabled contractors to evade payroll taxes and evade the verification of workers’ legal authorization to work in the U.S., resulting in over $14 million in untaxed payments.
Ron Loecker, the Special Agent in Charge of IRS-Criminal Investigation’s Tampa Field Office, emphasized the illegality and unfairness of using shell companies to pay workers under the table. He highlighted that this practice not only violates the law but also provides an unfair competitive advantage that ethical businesses cannot compete with.
“We will diligently investigate these schemes to ensure they comply with the law and restore fair competition to the industry.”