Two Florida Men Plead Guilty in $89M Off-the-Books Payroll and Tax Fraud Scheme

Two Florida men have pleaded guilty to federal charges for their roles in a years-long off-the-books payroll scheme that resulted in nearly $10 million in tax losses and enabled the illegal employment of undocumented workers in the construction industry.

Michael Mayorga and Francisco Alvarez entered guilty pleas before Magistrate Judge Leslie Hoffman Price of the Middle District of Florida. The pleas must still be accepted by a U.S. district court judge.

According to court documents and statements made in court, from 2015 to 2022, Mayorga and Alvarez, along with unnamed co-conspirators, created a network of shell companies through which they operated an unlicensed check-cashing and cash courier business. These shell entities cashed approximately $89 million in checks from construction subcontractors, who in turn used the cash to pay workers off the books—many of whom were undocumented immigrants working illegally in the United States.

Mayorga provided bookkeeping and tax preparation services to some of the shell companies, while Alvarez and others handled the physical distribution of the cash to subcontractors. In addition to the unreported cash payments, both men were involved in preparing and submitting false tax returns and documents, concealing the scheme from both the IRS and insurance companies.

Mayorga’s actions caused a tax loss of $8,647,824 to the IRS. Alvarez’s role resulted in an additional $2,331,731 in lost tax revenue.

Beyond the tax fraud, Alvarez filed a false worker’s compensation insurance application, securing artificially low insurance premiums for the shell companies. He then “rented” this insurance coverage to subcontractors, enabling them to falsely claim valid insurance when bidding on construction jobs. Mayorga also supplied fraudulent documents to insurance companies during audits to cover up the scheme.

The charges against the two men carry a maximum penalty of five years in prison, along with supervised release, restitution, and monetary fines. Sentencing will be determined by a federal district court judge based on U.S. Sentencing Guidelines and other statutory factors.

The investigation was conducted by IRS Criminal Investigation and Homeland Security Investigations. The case is being prosecuted by Senior Litigation Counsel Sean Beaty, Trial Attorneys Kavitha Bondada and Rebecca A. Caruso of the Justice Department’s Tax Division, and Assistant U.S. Attorney Amanda Daniels for the Middle District of Florida.

The charges and guilty pleas reflect the Department of Justice’s ongoing efforts to combat employment tax evasion and insurance fraud within the construction industry, particularly schemes that involve the use of shell companies and the exploitation of undocumented labor.

This article, "Two Florida Men Plead Guilty in $89M Off-the-Books Payroll and Tax Fraud Scheme" was first published on Small Business Trends