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LOWELL COUPLE SENTENCED FOR UNDER-THE-TABLE PAYROLL SCHEME

March 24, 2011

BOSTON, Mass. - A Lowell couple was sentenced today in federal court for having defrauded the Internal Revenue Service (IRS) and their workers compensation insurers by concealing millions of dollars of wages they paid to employees of their temporary employment agency.

JENNIFER MILESKI, 36 and her common law husband, KINH DINH DO, 34, both of Lowell, were sentenced today by U.S. District Judge Douglas P. Woodlock to one year and one day in prison to be followed by three years of supervised release, and ordered to pay $734,225.06 in restitution. They had pleaded guilty on September 14, 2010, to a three-count criminal information with conspiracy, mail fraud and assisting in the preparation of false tax returns.

MILESKI and DO operated a temporary employment agency in Lowell named C&A Associates that supplied workers to a graphics company to perform manual labor. The couple charged their customer by the hour for each employee, and were responsible for paying payroll taxes and workers compensation insurance for the employees. MILESKI was in charge of the business and kept its finances, while DO was responsible for recruiting workers, nearly all of whom were recent immigrants, and for distributing the payroll. At any given time, the couple had from 10 to 60 employees on the payroll.

The defendants concealed the true size of their payroll from the IRS and from their workers compensation insurer, in order to reduce their employer payroll taxes (FICA) and their workers compensation insurance payments. They did this by paying their employees in cash each week and hiding any record of the payments. Even though they retained a payroll service, they routinely told the service that C&A had no work and therefore no employees. Relying on this repeated misrepresentation, the payroll service filed over 20 quarterly payroll tax returns on behalf of C&A that reported no payroll. They similarly told the auditors for their workers compensation insurance carrier at the end of every policy period that C&A had no employees, and concealed any record of the cash payroll, knowing that the fewer employees they appeared to have, the lower their insurance premiums would be. Over the course of the six year scheme, the defendants paid out over $3.4 million in cash wages. In so doing, they fraudulently deprived the IRS of approximately $656,414 in tax payments and their insurance carrier of approximately $77,811 in premium payments.

United States Attorney Carmen M. Ortiz, William P. Offord, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation - Boston Field Division and Anthony DiPaolo, Chief of Investigations of the Massachusetts Insurance Fraud Bureau made the announcement today. The case was prosecuted by Assistant U.S. Attorneys Jonathan Mitchell and Sarah Walters of Ortiz’s Economic Crimes Unit.

 

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