October 12, 2005

PRESS RELEASE

THREE QUINCY RESIDENTS INDICTED IN
$30 MILLION UNDER-THE-TABLE PAYROLL SCHEME

Boston, MA... Three Quincy residents were charged today in an Indictment in connection with an under-the-table payroll scheme in which they allegedly paid hundreds of temporary employees, who performed manual labor at factories and warehouses in Massachusetts, a total of approximately $30 million in unreported cash payroll over a ten year period.

United States Attorney Michael J. Sullivan; Kenneth W. Kaiser, Special Agent in Charge of the Federal Bureau of Investigation in New England; Rebecca A. Sparkman, Special Agent in Charge of the U.S. Internal Revenue Service, Criminal Investigation; Peter Zegarac, Inspector in Charge of the U.S. Postal Inspection Service; and Daniel Skelly, Chief of Investigations of the Insurance Fraud Bureau of Massachusetts, announced today that TINA LE, age 47, STEVEN NGUYEN, age 47, and MERCEDES TANG, age 30, all of 301 Adams Street, Quincy, Massachusetts, were charged by a federal Grand Jury in a twenty-five-count Indictment. Specifically, each of the defendants is charged with 1 count of Conspiring to Defraud the IRS, 1 count of Conspiring to Commit Money Laundering, and 6 counts of Mail Fraud. Additionally, LE and NGUYEN are charged with 13 counts and 4 counts respectively of Procuring False Tax Returns.

The Indictment alleges that from December 1995 through the end of 2004, the defendants owned and operated a temporary employment agency that employed hundreds of workers. Under the terms of their agreements with the client companies to whom they provided temporary employees, the defendants were responsible for filing taxes on behalf of the employees and paying for workers' compensation insurance. It is alleged that the defendants would pay most of the employees in cash and not report the cash payments, as required by law, to the IRS. In so doing, it is alleged that the defendants failed to pay payroll, or "FICA" taxes, and to withhold taxes from their employees' pay. According to the Indictment, over the course of the ten year conspiracy, the unreported cash payroll totaled approximately $30 million. It is alleged that the defendants obtained most of the cash from a Worcester check casher.

The Indictment also alleges that the defendants defrauded their workers' compensation insurers. Like other employers, the defendants were legally required to pay for their employees' workers' compensation insurance. The insurance premiums were based in part on the size of the defendants' payroll. It is alleged that the defendants fraudulently reduced their insurance premiums by concealing their cash payroll from their insurers.

The Indictment further alleges that the defendants concealed their activities through the use of shell corporations. According to the Indictment, over the course of the conspiracy, the defendants would claim to have shut down the company in whose name they operated, and would re-incorporate under another name so as to avoid scrutiny by either the IRS or insurance auditors. The names of the shell corporations were First State Labor, Wonder Fast Labor Services, T. Nguyen Temporary, Mass Labor Services, Labor Staffing, and Star Labor Staffing. It is also alleged that as a further way of concealing their activities, the defendants used "straw" corporate officers, individuals who held titles of responsibility in the business but who really were paid by the defendants only for the use of their names.

Upon conviction, the defendants face up to years 5 years' imprisonment on the Conspiracy to Defraud the IRS charge, 5 years' imprisonment on each of the Procuring False Tax Return charges, 20 years' imprisonment on each of the Mail Fraud charges, and 20 years' imprisonment on the charge of Conspiracy to Commit Money Laundering.

The case was investigated by the Federal Bureau of Investigation, U.S. Internal Revenue Service, Criminal Investigation, U.S. Postal Inspection Service and the Insurance Fraud Bureau. It is being prosecuted by Assistant U.S. Attorneys Jonathan F. Mitchell in Sullivan's Economic Crimes Unit and Kristina Barclay in Sullivan's Asset Forfeiture Unit.

The details contained in the Indictment are allegations. The defendants are presumed to be innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

Press Contact: Samantha Martin, (617) 748-3139