Five Orlando residents were recently indicted on charges of conspiring to commit wire fraud and tax fraud, and they are facing the possible forfeiture of nearly $20 million as well as multiple local properties.
On Thursday, October 24, U.S. Attorney Roger B. Handberg announced the return of two indictments charging the five residents – Eduardo Anibal Escobar (44), Carlos Alberto Rodriguez (45), Adelmy Tejada (56), Rene Mauricio Escobar (53), and Juana Nelida Escobar (45) – with conspiracy to commit wire fraud and conspiracy to commit tax fraud.
The United States also intends to seek forfeiture of a total of at least $19 million as well as five residential properties located in Orlando, which are “proceeds of the alleged wire fraud offenses.”
According to the indictment, the defendants “established companies that purported to supply labor for construction contractors.” Under Florida law, any business that engages in construction work is required to secure and maintain workers’ compensation insurance.
The defendants applied for workers’ compensation insurance policies to cover a few employees and a minimal payroll. They then allegedly entered into agreements with construction workers, which often consisted of “undocumented aliens,” and the defendants then submitted paperwork to construction contractors to obtain work for these construction crews.
The indictment alleges that the defendants “falsely represent(ed) that the workers were the companies’ employees.” The workers proceeded to perform construction work under the supervision and direction of the contractors.
The contractors wrote payroll checks to the defendants’ companies for this work, and the checks were provided to “work crew leaders.” The checks were then deposited into back accounts in the name of the defendants’ companies.
The defendants allegedly withdrew cash from these accounts, and occasionally wrote checks, for the workers’ pay. Cash and checks were then provided to the work crew leaders. However, prior to “turning over the payroll,” the defendants allegedly deducted a “6% to 8% fee” for their services.
“The funneling of payroll from the contractors to the work crews in this way allowed the contractors and the work crews to disclaim responsibility for ensuring that required payroll taxes were paid, that adequate workers’ compensation insurance was provided, and that the workers were legally authorized to work in the United States,” reads the indictment.
In total, the defendants deposited over 46,000 payroll checks, which totaled more than $292 million, and they allegedly kept “at least $19 million in fees.” None of the parties involved, which included contractors, work crews, the defendants, and their companies, remitted payroll taxes to the Internal Revenue Service (IRS).
The unpaid taxes on the payroll total at least $52 million, according to the IRS.
The indictment further alleges that the defendants “cheated” the workers’ compensation insurance companies out of premiums. If the insurance companies had been aware that the polices were going to be used for over $290 million in payroll, they would have charged nearly $30 million in additional premiums.
An indictment is merely a formal charge that a defendant has committed a violation of the federal criminal laws. Every defendant is presumed innocent unless, and until, proven guilty.
If convicted of wire fraud, the defendants each face a maximum penalty of 20 years in federal prison, and a tax fraud conviction carries a maximum sentence of 5 years behind bars.
This case was investigated by Homeland Security Investigations, the Internal Revenue Service –Criminal Investigation, and the Florida Department of Financial Services. It is part of a continuing investigation by those agencies on the use of shell companies and “ghost” employees in the construction industry.