Federal prosecutors indicted twelve people from seven different companies on Tuesday in connection with employment tax fraud charges linked to an “expansive multi-year undercover investigation in the Myrtle Beach area and throughout the South Carolina coast.”
The investigation – led by the Internal Revenue Service (IRS) and U.S. Department of Homeland Security (DHS) – targeted “those in the construction industry who used unlicensed check cashers to facilitate under-the-table cash payments to employees, many of whom were unauthorized aliens.”
“The check cashers would also provide certificates of insurance falsely stating that the employees were covered under workers’ compensation insurance,” a release from the office of acting U.S attorney Rhett DeHart noted. “These off-the-book payments defrauded the United States out of applicable employment taxes on the employees.”
The release called the bust “the largest criminal Internal Revenue Service (IRS) operation in the history of the Pee Dee region.”
According to federal prosecutors, all twelve defendants have pleaded guilty to one felony count of conspiracy to defraud the United States government and one misdemeanor count of unlawfully employing illegal aliens.
“Those who steal from the Government, and by extension the American taxpayers, will not find refuge in South Carolina,” DeHart said in a statement. “By evading millions of dollars in taxes and falsely claiming their workers had insurance, these defendants made it harder for honest business owners to compete in the construction industry along South Carolina’s coast and they left their workers exposed to injury without insurance. I want to thank the IRS and HSI for their tireless efforts, as well as our local partners who assisted during this operation. We will continue to prosecute businesses and individuals who try to get ahead by breaking the law.”
Mona Passmore, the IRS special agent in charge of the operation, echoed DeHart’s sentiments – saying the defendants in this case “mistakenly believed they could disregard their tax obligations and gain a competitive advantage while doing so.”
Meanwhile, Ronnie Martinez – a special agent with DHS’ Homeland Security Investigation (HSI) unit – debunked the notion that such tax evasion schemes are “victimless” crimes.
“The biggest misconception about labor exploitation is that it’s a victimless crime and that couldn’t be further from the truth,” Martinez said. “Workers, competing businesses, people who have their identities stolen and even the local economy are all victims of this crime.” This case is shedding light on a crime that has happened in the shadows for too long and HSI and its partners will continue to hold accountable those involved in labor exploitation.”
According to federal prosecutors, their investigation began back in 2018 – when Sherri Lydon was U.S. attorney. Lydon left her post in December 2019 when she was confirmed by the U.S. Senate as a federal district judge for the Palmetto State.
The inquiry started when certain construction companies began “using check cashers” so that they could hire illegal aliens.
“To facilitate the scheme, a member of the construction company would meet with an unlicensed check chaser in places like parking lots for retail stores or coffee shops,” federal prosecutors alleged. “The construction company would give the check casher a business check in a certain amount made out to a company the check casher had created, and the check casher would give the construction company representative a bag of cash that would be used to pay the employees. In exchange for their services, the check casher held back a fee of approximately three percent.”
IRS undercover agents embedded themselves in the Myrtle Beach area and “recorded multiple interactions with the various defendants’ companies.”
“To make it appear like the employees had valid insurance on job sites, the check casher would also provide a certificate of workers’ compensation insurance that was not actually valid for any of the construction company’s employees,” prosecutors added. “The parties agreed that the check casher would, on paper, claim to be a subcontractor who provided the employees and provided insurance.”
This arrangement hid “the true nature of the scheme,” according to prosecutors.
Those who entered guilty pleas included 49-year-old Daniel A. Lavoie and 48-year-old Enrique R. Reyes of Conway, S.C., both of whom were employed by Daniel Lavoie Construction Services. Walter A. Duran, 45, and Lisa Caulley Sellers, 57, of Duran Masonry in Myrtle Beach, S.C. also pleaded guilty, as did 52-year-old Ming Zue Nan and 39-year-old Katherine L. Welker of Extreme Siding in Myrtle Beach. Marylany Hardman Levino, 36, and Josafa P. Neto, 43, of Master Homes Calabash in Myrtle Beach entered guilty pleas, as did 56-year-old Saul Prieto and 54-year-old Martha E. Zarate of Metro Concrete Finishers in Myrtle Beach. Finally, 45-year-old Marcos Caetano de Almeida of Master Homes Design Center in Myrtle Beach and 38-year-old Johanna A. Carpio of Paint by Numbers in Myrtle Beach also pleaded guilty.
All of these defendants could be imprisoned for up to five-and-a-half years – while facing fines of up to $250,000 apiece. All have collectively agreed to make restitution in the amount of $3 million.
Chief U.S. district court judge R. Bryan Harwell accepted the guilty pleas and will impose sentences on the defendants at a later date.
ABOUT THE AUTHOR …
Will Folks is the founding editor of the news outlet you are currently reading. Prior to founding FITSNews, he served as press secretary to the governor of South Carolina. He lives in the Midlands region of the state with his wife and seven children. And yes, in addition to having lots of kids he has LOTS of hats (including that Chicago Blackhawks’ lid pictured above).
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