Orlando Man Sentenced For Fraudulent Scheme To Evade Payroll Taxes And Employees’ Compensation Necessities In Development Business | USAO-MDFL

Jacksonville, Florida – U.S. District Judge Marcia Morales Howard sentenced Gregorio Jose Fuentes-Zelaya, 27, Orlando, to 33 months in prison for conspiracy. The court also ordered Fuentes-Zelaya to pay the IRS a refund of $ 5,766,286 and an insurance company of $ 68,073. In addition, the court ordered that Fuentes-Zelaya forfeit its interest in US $ 230,764 seized from two bank accounts. The court also issued a monetary order of $ 1,367,625 representing the proceeds of the wire fraud.

Fuentes-Zelaya pleaded guilty on September 11, 2020. His co-defendant Dennis Alexander Barahona pleaded guilty on March 29, 2021. His hearing is scheduled for July 6, 2021.

According to court records, Fuentes-Zelaya founded Shell companies allegedly in the construction industry. He or his co-conspirators have taken out workers’ compensation insurance on behalf of the Shell companies to cover minimum wages for some alleged employees. The conspirators then “hired” workers’ compensation insurance to work teams that had been subcontracted with contractors for projects in various Florida counties. Fuentes-Zelaya or his co-conspirators sent the contractors a certificate as “proof” that the work teams had workers’ compensation insurance, as required by Florida law. By sending the certificate, the conspirators falsely presented that the work teams were working for their companies. Over the course of the program, Fuentes-Zelaya and his co-conspirators “leased” the certificates to hundreds of work teams.

Contractors issued paychecks to Shell companies for workers’ wages, and the conspirators cashed those checks and distributed the money to the work teams after their fee, which was usually about 6% of the payroll. During the period of the program, the conspirators cashed a total of approximately $ 22,793,748 in paychecks, with their fees totaling approximately $ 1,367,625. Neither the Shell companies nor the contractors reported to government agencies the wages paid to workers, nor did they pay workers or employers’ share of wage taxes – including Social Security, Medicare, and federal income tax. According to the IRS, the amount of income tax on wages of $ 22,793,748 was $ 5,766,286.

The system also made it easier to avoid the higher cost of obtaining adequate workers ‘compensation insurance for hundreds of workers on the work teams that Fuentes-Zelaya and his co-conspirators had “rented” workers’ compensation insurance from. Had employee indemnity insurance been taken out for a total wage bill of $ 22,793,748, the insurance premiums would have been approximately $ 3,684,057. The policies, which Fuentes-Zelaya and his co-conspirators bought and then “rented” out, involved estimated wages of $ 80,800 to $ 100,800. The insurance company issued these policies for premiums between $ 15,206 and $ 31,268.

“This criminal was covertly hiding his business dealings behind numerous illegitimate companies and enabled over $ 22.7 million in illegal salary payments while defrauding the US insurance industry,” said K. Jim Phillips, assistant special agent for HSI Jacksonville. “Thanks to the careful work of HSI special agents and our law enforcement partners, he will not be able to take advantage of the substantial criminal revenues generated from these crimes.”

“Today’s conviction of Gregorio Jose Fuentes-Zelaya is a reminder that paying individual and corporate taxes is an obligation, not a choice,” said IRS Criminal Investigation Special Agent Brian Payne. “We recognize the adverse effects of labor tax evasion. This results in the loss of tax revenue for the United States government, the loss of future Social Security and Medicare benefits for workers, and creates an unequal playing field for competing companies. Since our tax system depends on everyone paying their fair share, employment tax fraud will continue to be a top priority for IRS-CI’s special agents. “

This case has been investigated by Homeland Security Investigations, the Internal Revenue Service – Criminal Investigation, and the Florida Department of Financial Services. It is being prosecuted by United States Assistant Attorney Arnold B. Corsmeier.