Two Florida men have pleaded guilty before Magistrate Judge Leslie Hoffman Price for the Middle District of Florida for their roles in a years-long off-the-books payroll scheme.
A U.S. district court judge must accept the pleas.
According to court documents and statements made in court, Michael Mayorga and Francisco Alvarez conspired with others to operate an illegal, off-the-books cash payroll system for construction workers, thereby avoiding payment of employment taxes to the IRS and defrauding workers’ compensation insurance companies.
Through the scheme, Mayorga and Alvarez facilitated the employment of undocumented aliens working illegally in the United States.
From 2015 to 2022, Alvarez, Mayorga, and their co-conspirators created a series of shell companies to operate an unlicensed check-cashing and cash courier service business, which cashed approximately $89 million in checks from subcontractors in the construction industry.
The subcontractors used the cash to pay their workers.
Mayorga provided bookkeeping and tax preparation services for some of the shell companies, and Alvarez and others facilitated the distribution of millions in cash to subcontractors.
Mayorga also prepared false returns for the shell companies and members of the conspiracy that Alvarez and others filed. Specifically, Alvarez caused the filing of false tax returns and tax documents on behalf of one of the shell companies.
In total, Mayorga caused the IRS a tax loss of $8,647,824. In total, Alvarez caused a tax loss to the IRS of $2,331,731.
In addition to the tax crimes, Alvarez filed a false workers’ compensation insurance application. This allowed the shell companies to pay small insurance premiums.
After fraudulently obtaining the insurance, Alvarez “rented” it to subcontractors, allowing them to provide false proof of insurance when bidding with contractors. Mayorga also provided false documents to insurance companies auditing them.
Alvarez and Mayorga will be sentenced at a later date. They each face a maximum penalty of five years in prison, a period of supervised release, restitution, and monetary penalties.
A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
