WASHINGTON – Ruben Reyes, a South Florida resident, pleaded guilty today to one count of filing a false tax return, the Justice Department and the Internal Revenue Service (IRS) announced.
According to court documents, Reyes acted as a "recruiter" or "promoter" for two shell companies, which were used by construction businesses to avoid employment taxes and worker’s compensation insurance requirements. Construction companies wrote checks to Reyes’s shell companies, pretending that the shell companies were legitimate subcontractors. In reality, the shell companies performed no work for the construction companies.
Reyes arranged for businesses to use his shell companies and for the checks written to those companies to be cashed at local check-cashing stores. He would then give the cash to the construction companies, which would in turn pay their workers in cash. By doing so, the construction companies were able to avoid reporting their workers to the IRS or insurance companies, evading taxes and higher insurance premiums.
Reyes received a cut of each check written to one of his shell companies. Between 2005 and 2006, more than $15 million in checks were funneled through the shell companies. Reyes derived substantial income from his share of this money, which he did not report on his tax returns.
The court scheduled Reyes’s sentencing for May 4, 2011. He faces a maximum of three years in prison.
IRS Criminal Investigation agents investigated the matter, and Justice Department Tax Division trial attorneys Jason Poole and Matthew Mueller are prosecuting the case with assistance from the U. S. Attorney’s Office for the Southern District of Florida.
More information about the Justice Department’s Tax Division and its enforcement efforts is available at www.usdoj.gov/tax.