Five individuals from Orlando have been indicted on federal charges of conspiracy to commit wire fraud and tax fraud in connection with an alleged scheme to defraud construction contractors, workers, and the government.
The defendants, Eduardo Anibal Escobar, Carlos Alberto Rodriguez, Adelmy Tejada, Rene Mauricio Escobar, and Juana Nelida Escobar, allegedly created companies that claimed to provide labor for construction contractors.
However, instead of legitimate employment, the indictment alleges they engaged in a complex scheme to avoid paying taxes and providing workers’ compensation insurance.
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The Alleged Scheme
The defendants allegedly applied for workers’ compensation insurance policies for a minimal number of employees and a low payroll. They then contracted with construction work crews, often composed of undocumented workers, and falsely presented these workers as their own employees to contractors.
The contractors would issue payroll checks to the defendants’ companies, which were then cashed and distributed to the workers, minus a 6% to 8% fee kept by the defendants. This arrangement allowed both the contractors and the work crews to avoid responsibility for payroll taxes, workers’ compensation insurance, and verification of workers’ legal status.
Over the course of the alleged conspiracy, the defendants deposited over 46,000 payroll checks totaling more than $292 million. They allegedly kept at least $19 million in fees while failing to remit any payroll taxes, such as Social Security, Medicare, and federal income tax. The IRS estimates the unpaid taxes to be at least $52 million.
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The scheme also defrauded workers’ compensation insurance companies of premiums. Had the insurers known the true payroll amount, they would have charged an estimated $28 million more in premiums.
Each defendant faces up to 20 years in federal prison for the wire fraud charges and up to 5 years for the tax fraud charges. The government is also seeking the forfeiture of at least $19 million and five residential properties in Orlando, allegedly acquired with proceeds from the scheme.
It’s important to note that an indictment is merely an accusation, and the defendants are presumed innocent until proven guilty.
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The case is being investigated by Homeland Security Investigations, the IRS, and the Florida Department of Financial Services as part of a larger investigation into the use of shell companies and “ghost” employees in the construction industry.
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