Illegal Alien Sentenced for $89 Million Payroll Fraud
An undocumented immigrant was sentenced to eight years in federal prison for involvement in an $89 million payroll fraud scheme that enabled illegal construction workers and their employers to evade taxes.
“Today, we held individuals from Honduras accountable for a bold scheme that defrauded U.S. taxpayers of over $38 million to facilitate the employment of illegal aliens,” stated Assistant Attorney General Colin McDonald.
According to McDonald, “This case highlights how unregulated illegal immigration contributes to extensive payroll tax fraud and an underground economy that negatively impacts American workers and taxpayers. This sentence sends a clear message that those who exploit open borders, deceive the U.S. Treasury, and break federal laws will face consequences.”
Officials from the Department of Justice outlined how undocumented immigrants participated in operating the payroll system by various means to keep illegal construction workers off the records.
From 2015 to 2022, Mario Flores, a Honduran immigrant, collaborated with others to set up a network of shell companies that provided unauthorized check cashing and cash delivery services. Court documents revealed that these shell companies processed about $89 million in checks from subcontractors in the construction industry and charged fees based on the amount cashed. This arrangement allowed construction contractors to pay their workers in cash, avoiding payroll taxes and neglecting to consider the workers’ legal status in the U.S. Flores also submitted false tax documents to the IRS to disguise the operation.
Furthermore, Flores and his accomplices defrauded workers’ compensation insurance companies by leasing insurance policies to contractors and providing fabricated information, including the number of covered workers and payment amounts.
“Homeland Security Investigations is dedicated to safeguarding the integrity of our financial system and enforcing our laws,” remarked HSI’s John Condon. “Those who coordinated substantial payroll tax fraud and enabled the illegal hiring of unauthorized workers will be held accountable.”
Flores pleaded guilty to one count of conspiracy to defraud the U.S. government and one count of conspiracy to operate an unauthorized money transfer business.
Flores’ co-conspirators, Iris Villafranca, Osman Zapata, and Francisco Alvarez, have already received sentences ranging from four to 17 years in federal prison.
