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Dive brief:
- A Florida woman who ran two fraudulent construction labor companies in the Tampa area he was sentenced to 12 months and a day to federal prison for conspiracy to defraud the United States and the Internal Revenue Service.
- U.S. District Judge Virginia M. Hernandez Covington also ordered Gabriela Inamagua, 29, to pay nearly $9 million in restitution to two victims’ insurance companies and the IRS. Inamagua pleaded guilty to the charges in October, according to a Jan. 2 statement from the U.S. attorney’s office.
- Inamagua’s father and his father’s former girlfriend were convicted of similar crimes in 2022, according to the claims journal. The cases involve broader issues that federal agencies have recently highlighted regarding one increased state and federal payroll tax evasion and workers’ compensation fraud by US construction companies.
Diving knowledge:
Inamagua owned and operated two fraudulent construction companies that purported to provide construction services and labor for construction contractors and subcontractors, according to court documents. Florida law required the companies, Uno Construction and Perfect Builders Group, to secure and maintain adequate workers’ compensation insurance coverage.
These “machine” companies had agreements with contractors and subcontractors to use workers, many of whom were not authorized to work in the US, allegedly as Inamagua employees on construction sites, although in reality they were working for and under the supervision and daily management of contractors. , according to the statement. At the time, Inamagua and its companies regularly received payroll checks from contractors who cashed various financial institutions to pay Inamagua’s so-called employees and other related expenses.
Court documents allege that Inamagua fraudulently represented on insurance applications that his companies had a very limited payroll and a very limited number of employees working on construction jobs, according to the communicated Inamagau also caused the transmission of false and fraudulent wire communications to numerous contractors claiming that their companies’ employees had full workers’ compensation coverage.
Inamagua companies actually received and cashed more than $34 million in checks from various construction contractors for these alleged employees, according to court documents. These payroll figures far exceed the limited payroll figures that Inamagua had disclosed to workers’ compensation insurance companies.
As a result, those employees, who were actually employees of other entities, were performing work at jobs without adequate insurance coverage, court documents allege. In addition, the insurance companies that dealt with the Inamagua companies lost the premiums they would have collected if they had known the actual number of workers involved.
‘ghost’ employees
The IRS Criminal Investigation unit and the Florida Department of Financial Services investigated the case, with assistance from Homeland Security Investigations. It is part of a long-running investigation by these agencies into the use of shell companies and “ghost” employees in the construction industry.
Other federal agencies are also repressing on financial fraud in the construction sector. The Financial Crimes Enforcement Network, part of the U.S. Treasury Department, issued a warning to financial institutions last year highlighting an increase in state and federal payroll tax evasion and workers’ compensation fraud for part of the US construction companies.
State and federal tax authorities lose hundreds of millions annually to these types of schemes, FinCen said, and the schemes adversely affect legitimate contractors and their workers by putting them at a competitive disadvantage.
As a result of their misrepresentations, the Inamagua companies also abdicated responsibility for ensuring that workers at the site were legally authorized to work in the US and evaded laws requiring them to pay taxes state and federal payroll on behalf of these workers, according to the release. In addition, Inamagua businesses did not collect or remit all required payroll taxes.
The contractors who actually paid the wages of these workers and used their services also avoided liability for these taxes. The amount of these unpaid taxes totaled more than $8.9 million.
“The construction industry as a whole suffers when fraudsters exploit the system by creating shell companies to illegally pay workers off the books in order to defraud insurance companies and avoid employment taxes,” said Special Agent in Charge IRS-CI functions, Tara K. Reed. at launch.
