LAKELAND, Fla. – A 60-year-old Lakeland man has been sentenced to 18 months in federal prison for conspiracy to defraud the U.S. Department of the Treasury, to commit wire fraud, and to submit false statements and reports to the U.S. Department of the Treasury.
The court also entered an order of forfeiture for more than $3.6 million, the estimated proceeds of this multi-pronged fraud conspiracy.
Raju Gandhi, 60, Lakeland, pleaded guilty on September 23, 2021.
According to court documents, Gandhi owned and operated a money service and check cashing business in Polk County. Gandhi cashed large numbers of checks made payable to a number of shell construction companies that purported to supply construction services and labor for construction contractors and subcontractors. In order to comply with Florida law, these shell construction companies were required to secure and maintain adequate worker’s compensation insurance coverage.
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These shell companies had agreements with contractors and subcontractors to use workers purported to be their employees at construction sites, but these workers were often undocumented aliens who were actually working for and under the daily supervision and direction of the contractors themselves. These shell construction companies regularly received “payroll checks” from the contractors that were cashed at various financial institutions to pay the purported “employees” of these shell construction companies.
During the time period charged, the owners of these shell construction companies falsely and fraudulently represented in insurance applications that their companies had a very limited payroll and a limited number of employees who worked on construction jobsites.
They also falsely and fraudulently sent wire communications to numerous contractors representing that their companies’ employees had full worker’s compensation coverage.
In reality, these shell construction companies provided no real labor force at all but received and cashed more than $147 million at and through Gandhi’s check-cashing business in Lakeland. Gandhi was aware of this scheme and hid his activity by falsely under-reporting to the Department of Treasury the fees that he had collected for cashing those contractor checks.
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These checks were made payable to the shell construction companies from various construction contractors who, in fact, actually supplied the labor force for the jobs. As a result, these employees, performed work on jobsites without adequate insurance coverage.
In addition, the worker’s compensation insurance companies lost the higher premiums they could have charged had they been aware of the true number of workers their policies were thus being manipulated to cover.
Due to these misrepresentations, the shell construction company owners disclaimed responsibility for ensuring that jobsite workers were legally authorized to work in the United States and for paying the required state and federal payroll taxes on these workers’ wages. The contractors who actually paid these workers’ wages and used their services were thus also able to avoid responsibility for paying those taxes as well.
“Money Service Businesses are a critical component to the nation’s financial system particularly amongst the unbanked and underbanked population, MSB owners and operators have a responsibility to the community to provide fair and transparent services to their customers” said Homeland Security Investigations (HSI) Assistant Special Agent in Charge John Dumas. “HSI, alongside our state, local, and federal law enforcement partners will aggressively investigate and support the successful prosecution of those who operate outside of, or turn a blind eye to the law for their own personal enrichment.”
This case was investigated by Homeland Security Investigations (HSI) and the State of Florida Department of Financial Services.
It is part of a broader investigation by those agencies into the use of shell companies and “ghost” employees in the construction industry. It was prosecuted by Assistant United States Attorney Jay L. Hoffer.
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