WEST PALM BEACH CONTRACTORS SENTENCED FOR HIRING ILLEGAL WORKERS; TAX FRAUD
Wifredo A. Ferrer, United States Attorney for the Southern District of Florida, Daniel W. Auer, Special Agent in Charge, Internal Revenue Service (I.R.S.), Criminal Investigation, and John Askins, Director, Florida Department of Financial Services, Division of Insurance Fraud, announced today’s sentencing of defendants John M. David and Juan A. Gonzalez by U.S. District Judge Kenneth A. Marra in West Palm Beach, Florida. On June 16, 2010, David and Gonzalez pled guilty to conspiracy charges related to their participation in a scheme to employ illegal aliens and thereby avoid the payment of employment taxes and workers’ compensation premiums for these workers.
John M. David was sentenced to 16 months in prison, to be followed by 2 years of supervised release. Juan A. Gonzalez was sentenced to 10 months in prison, to be followed by 2 years of supervised release. In addition, the defendants were ordered to pay joint and several restitution totaling $479, 906.60, which David paid in full prior to today’s sentencing.
The charges involve Sun Deck Concrete, Inc. (“Sun Deck”), a Florida corporation located in Palm Beach County, which provides concrete services to residential and commercial contractors. John M. David is the President of Sun Deck and Juan A. Gonzalez was a supervisor at the business.
According to court documents, in the early 2000s, Sun Deck’s business began to grow and the company needed to hire additional laborers. To meet this need and to remain profitable, Sun Deck turned to undocumented workers, many of whom were Honduran and Mexican nationals who were living in the United States illegally. In order to conceal the fact that Sun Deck was hiring and paying illegal aliens, John David and Juan A. Gonzalez devised a scheme to pay these workers through a series of shell companies.
According to court documents, the shell companies, which had been set up by co-conspirators, purportedly provided labor services to construction companies like Sun Deck. In truth, the companies provided no legitimate services and were set up for the sole purpose of funneling wages from the construction companies to the illegal workers. To make the shell companies appear legitimate, the co-conspirators opened corporate bank accounts, obtained federal tax identification numbers, and purchased fraudulent workers’ compensation insurance policies for the companies.
According to court documents, between 2005 and 2006, Gonzalez and other Sun Deck supervisors recruited more than twenty illegal aliens to work at Sun Deck work sites. Sun Deck controlled all aspects of the illegal workers’ employment. Specifically, Gonzalez and the other Sun Deck supervisors, in consultation with David, hired and fired the illegal workers, determined their work assignments and schedules, supervised their work at the job site, and set their hourly wages. At the end of each week, Gonzalez and the other Sun Deck supervisors calculated the wages due to each illegal alien and reported these wages to David, who would approve the issuance of checks payable to the shell companies for the amount of the wages, as well as additional monies to cover kickbacks to the co-conspirators and supervisors and fees to the check cashing store.
According to court documents, during 2005 and 2006, David caused Sun Deck to pay more than $2 million in cash wages through the shell companies in order to conceal the fact that Sun Deck was employing illegal workers and to avoid the payment of employment taxes and workers’ compensation premiums for these workers. As a result of this scheme, David defrauded the Internal Revenue Service out of $316,254.60 in employment taxes which were due and owing on these wages. In addition, Sun Deck failed to disclose in its monthly audit reports which were sent via the United States mail to Bridgefield Employers Insurance Company, Sun Deck’s insurance carrier, that it had paid approximately $2 million in wages to the illegal aliens. Consequently, Sun Deck avoided the payment of approximately $163,652 in workers’ compensation premiums due and owing to Bridgefield for these employees.
Mr. Ferrer commended the Internal Revenue Service, Criminal Investigation Division and the Florida Department of Financial Services, Division of Insurance Fraud, for their investigation of this matter. This case is being prosecuted by Assistant U.S. Attorney Adrienne Rabinowitz.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.