FOR IMMEDIATE RELEASE
November 21, 2008
WWW.USDOJ.GOV/USAO/MA
CONTACT: CHRISTINA DiIORIO-STERLING
PHONE: (617)748-3356
E-MAIL: USAMA.MEDIA@USDOJ.GOV
LOWELL MAN SENTENCED FOR ROLE IN LARGEST CASH WAGE SCHEME IN STATE HISTORY
BOSTON, MA - A Lowell man was sentenced late yesterday in federal court after pleading guilty to charges that he wilfully failed to keep tax records and failed to supply information to the IRS.
United States Attorney Michael J. Sullivan; Tyrone G. Barney, Special Agent in Charge of the U.S. Internal Revenue Service, Criminal Division – Boston Field Office; Warren T. Bamford, Special Agent in Charge of the Federal Bureau of Investigation – Boston Field Office; and Anthony DiPaolo, Chief of Investigations for the Insurance Fraud Bureau of Massachusetts; announced that XIEU VAN SON of Lowell, Massachusetts, was sentenced to two years probation because of his role as a “straw owner” of a temporary employment agency operated by Aimee King McElroy and Daniel W. McElroy.
In February 2008, the McElroys were convicted, following a 2 ½ week trial, of conspiring to defraud the IRS and their workers compensation insurers. McElroy was previously sentenced to 108 months imprisonment, to be followed by three years supervised release and $9,103,335 million in restitution for operating the largest payroll scheme ever prosecuted in Massachusetts. King McElroy previously was sentenced to 78 months imprisonment, to be followed by three years supervised release and the same restitution.
It was revealed at trial that from the early 1990's to June 2001, the McElroys operated a temporary employment agency that did business under the names the Dan Agency, the Daily Agency, Daily A. King Labor, Inc., Pro Temp Company, PTC and Precission Temp Corp. To avoid paying employment taxes, such as Social Security and Medicare, and to fraudulently reduce the businesses’ insurance premiums, the McElroys arranged to pay more than $43 million of their payroll in cash. The McElroys also recruited VAN SON to act as the nominal president of one of the entities to disguise their true ownership and control over the business. The hidden payroll resulted in a loss of approximately $10 million to the IRS and approximately $7 million to workers compensation insurance companies.
The McElroys’ accountant, Charles Wallace, previously was sentenced to 40 months imprisonment for his role in assisting the McElroys with filing false tax returns and fabricating payroll documents provided to the insurance companies. The other straw owner, Dich Trieu, also received a probationary sentence.
This case was investigated by the Internal Revenue Service, Criminal Investigation – Boston Field Office and the Federal Bureau of Investigation – Boston Field Office, with assistance from the Insurance Fraud Bureau of Massachusetts. It was prosecuted by Assistant U.S. Attorneys Paul G. Levenson, Jonathan F. Mitchell and Sarah E. Walters of Sullivan’s Economic Crimes Unit.
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