Proprietor of Development Firm Sentenced for Tax and Staff’ Compensation Insurance coverage Fraud | USAO-MA

BOSTON – The owner of a Revere construction company was convicted Thursday, June 10, 2021 of engaging in a covert payroll program that defrauded the government of more than $ 500,000 and insurance carriers of about $ 93,000.

Ralph Caruso, 72, of Wenham, was sentenced to three years probation by George A. O’Toole, a US District Court judge, the first year of which was served in domestic prison. Caruso was also sentenced to pay $ 546,320 to the IRS and $ 93,430 to workers’ compensation funds and forfeit $ 93,000. The government recommended a year and a day imprisonment.

In January 2021, Caruso pleaded guilty to seven cases of false tax returns and five cases of postal fraud.

For the tax years 2008 to 2016, Caruso paid its employees wages on payroll and under the table. Employee wages paid through payroll accounts have been reported to the IRS and taxes have been properly withheld and repaid. However, under the table salaries totaled more than $ 2.2 million that Caruso did not collect, settle, or pay the IRS in the form of required withholding and FICA taxes. The cash payments to the employees were financed through off-book accounts created by Caruso and used exclusively to pay the subordinate wages. By failing to pay required taxes on $ 2.2 million in wages, Caruso avoided more than $ 546,000 in federal taxes.

Caruso was also required by state law to take out workers’ compensation insurance. Workers’ rewards were based on a review of their payroll to determine the actual wages paid. By only showing the pay slips for the wages paid on the books, Caruso underestimated the wages for which he owed insurance premiums by more than $ 93,000.

This was announced by acting US Attorney Nathaniel R. Mendell and Ramsey E. Covington, acting special agent for the criminal investigation of the Internal Revenue Service in Boston. U.S. Assistant Attorney Victor A. Wild of Mendell’s Securities, Financial & Cyber ​​Fraud Unit is pursuing the case.