Oscar Arnelson Rodriguez-Cruz, 41, from Orlando has been sentenced to 27 months in federal prison for conspiracy to commit wire fraud and conspiracy to defraud the IRS of federal payroll taxes for construction workers, the US Attorney’s Office in Jacksonville says in a statement.
The court also ordered Rodriguez-Cruz to forfeit $626,817, the amount of proceeds obtained as a result of the wire fraud offense, and to pay restitution to the IRS for a tax loss of $3,436,008. Rodriguez-Cruz is a Honduran citizen who is unlawfully present in the United States.
He had previously pleaded guilty.
According to court documents, Rodriguez-Cruz engaged in a scheme through which construction contractors engaged the services of individuals who were living and working in the United States illegally. Rodriguez-Cruz formed a shell company that entered into agreements with the contractors to provide construction workers.
By obtaining and paying the workers through the shell companies, the contractors disclaimed responsibility for ensuring that the workers were legally authorized to work in the United States, that required state and federal payroll taxes were paid, and that adequate workers’ compensation insurance was provided.
After creating the shell company, Rodriguez-Cruz applied for a workers’ compensation insurance policy that covered a one-year period. In the application, Rodriguez-Cruz represented that the policy would cover five employees and an estimated annual payroll of $121,000. The insurance company issued the policy, charging a premium of $20,473.
To pay the workers, the contractors wrote payroll checks to the shell company. Rodriguez-Cruz then cashed the checks and distributed the cash to crew leaders, who paid the workers in cash. No state or federal payroll taxes, such as for Medicare and Social Security, were deducted from the workers’ pay, in violation of Florida and federal law.
Rodriguez-Cruz kept approximately 4 percent of the amount of each payroll check as a fee. During the scheme, he cashed payroll checks for hundreds of workers totaling $15,670,438, with his fee totaling $626,817. The annual premium for a workers’ compensation insurance policy covering that payroll amount would have totaled approximately $2,511,060. Had the total payroll been properly reported to the government, the payroll taxes due would have been approximately $3,436,008.
“This case is another example of HSI’s investigative expertise in worksite enforcement and financial crimes,” said James C. Spero, Homeland Security Investigations (HSI) Tampa Special Agent in Charge. “HSI continues to identify, disrupt, and eliminate the criminal schemes used to exploit our financial industry and to garner profit from the labor of undocumented aliens.”
“Today’s sentence should send a message to those involved in the business of evading employment taxes,” said Special Agent in Charge Mary Hammond of the IRS Criminal – Investigation, Tampa Field Office. “Let this be a warning to all that law enforcement will not allow construction contractors to gain unfair advantage by breaking the law.”