Norcross business owners sentenced for defrauding the CDC
ATLANTA - Cesar Arbelaez Tabares and Juan Carlos Bazantes, who owned and operated IWES Contractors, Inc., a drywall labor supply company in Norcross, Georgia, have been sentenced to each serve eight years in prison and pay a $75,000 fine following their trial and convictions for submitting false certified payroll forms to the Centers for Disease Control and Prevention (CDC) in connection with a construction project at the federal facility.
“Federal contractors and subcontractors are not immune from rules and laws that apply to any company with employees,” said U.S. Attorney Byung J. “BJay” Pak. “The jury’s verdict and the court’s sentence in this case reinforce that if you want to compete and obtain a federal contract work, you must abide by the law and truthfully report your payroll and employment tax withholdings.”
“Cesar Arbelaez Tabares and Juan Carlos Bazantes, as owners and operators of IWES Contractors Inc., had a known legal duty to withhold employment taxes from their employee wages” said James E. Dorsey, Acting Special Agent in Charge, IRS Criminal Investigation. “Tabares and Bazantes’ willful failure to withhold employment taxes was a deliberate attempt to undermine the tax system. IRS Criminal Investigation will remain committed to investigating and prosecuting employment tax fraud.”
“Cesar Arbelaez-Tabares and Juan Carlos Bazantes, principals of IWES Contractors, Inc., a drywall contracting company, submitted fraudulent certified payrolls in violation of the Davis-Bacon and Related Acts. We will continue to investigate those who undermine the U.S. Department of Labor’s ability to ensure that American workers are paid proper wages and that employers make the required payroll deductions and benefit contributions,” stated Rafiq Ahmad, Special Agent-in-Charge of the Atlanta Regional Office, Office of Inspector General, U.S. Department of Labor.
“By not withholding employment taxes from their wages, Cesar Arbelaez-Tabares and Juan Carlos of IWES Contractors willfully attempted to defraud the federal government,” said Derrick L. Jackson, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “This verdict and sentence demonstrates OIG’s commitment to hold accountable those who commit fraud against HHS agencies and departmental programs.”
According to U.S. Attorney Pak, the charges, and other information presented in court: Cesar Arbelaez Tabares was the Chief Executive Officer and Juan Carlos Bazantes was the Chief Financial Officer of IWES, a Norcross-based business that supplied drywall laborers to contractors and subcontractors for construction projects. Beginning in 2012, IWES supplied drywall laborers for a construction project with the CDC.
Under the direction of Tabares and Bazantes, IWES maintained a double payroll system for its workers on the CDC project, which internally classified those workers as either “W2.REAL” or “W2.F.2CHK”. Those workers who were classified as “W2.REAL” received one paycheck each pay period with employment taxes withheld, received an IRS Form W-2 at the end of the calendar year, and were reported on quarterly employment taxes filed by IWES with the IRS.
Those workers who were classified as “W2.F.2CHK” received two paychecks simultaneously each pay period. The first paycheck totaled the worker’s net pay (gross wages minus employment taxes withheld), while the second paycheck received by the worker totaled the employment taxes withheld from the first paycheck so that the worker, in reality, was receiving his or her gross wages with no tax withholdings. Workers classified as “W2.F.2CHK” performed many of the same job duties as those who were classified as “W2.REAL,” but they did not receive an IRS Form W-2 at the end of the calendar year and were not reported on quarterly employment taxes filed by IWES with the IRS.
In connection with its subcontracting work on the CDC project, Tabares and Bazantes caused IWES to submit fraudulent certified payroll forms to the CDC, signed under penalty of perjury, which falsely represented that employment taxes had been withheld for all of the IWES workers on the CDC project, including those whom IWES had internally classified as “W2.F.2CHK” and whose employment tax withholdings were being returned to the employee in the form of a simultaneous second paycheck.
Cesar Arbelaez Tabares, 37, of Pembroke Pines, Florida, and Juan Carlos Bazantes, 45, of Miami, Florida, were sentenced by U.S. District Court Judge Steve C. Jones to eight years in federal prison. Tabares and Bazantes were each ordered to pay a $75,000 fine, and also serve three years of supervised release following completion of their prison sentence.
Tabares and Bazantes were found guilty by a jury following a one-week trial in August and September 2017, on one count of conspiracy and six counts of submitting false certified payroll forms to the CDC. They were acquitted of related tax charges.
This case was investigated by the Internal Revenue Service Criminal Investigation, the U.S. Department of Labor-Office of Inspector General and the U.S. Department of Health and Human Services-Office of Inspector General.
Assistant U.S. Attorneys Steven D. Grimberg and Ryan J. Huschka prosecuted the case. The U.S. Department of Justice Tax Division provided valuable assistance.
For further information please contact the U.S. Attorney’s Public Affairs Office at USAGAN.PressEmails@usdoj.gov or (404) 581-6016. The Internet address for the U.S. Attorney’s Office for the Northern District of Georgia is http://www.justice.gov/usao-ndga.