Twelve Defendants Sentenced for Tax Felonies and Immigration Crimes after Major Undercover Operation
FLORENCE, SOUTH CAROLINA — Twelve Defendants across seven construction-related companies have been sentenced for employment tax fraud felonies and crimes related to hiring unauthorized aliens in the largest criminal Internal Revenue Service (IRS) operation in the history of the Pee Dee region.
The convictions are the first to come from an expansive multi-year undercover investigation in the Myrtle Beach area and throughout the South Carolina coast led by the IRS and Homeland Security Investigations (HSI).
The operation targeted those in the construction industry who used unlicensed check cashers to facilitate under-the-table cash payments to employees, many of whom were unauthorized aliens. The check cashers would also provide certificates of insurance falsely stating that the employees were covered under workers’ compensation insurance. These off-the-book payments defrauded the United States out of applicable employment taxes on the employees. At least $15 million in checks were cashed by these Defendants, resulting in millions of dollars of total losses to the Government. Based on the investigation, at least tens of millions of dollars of tax losses have occurred throughout the South Carolina coast because of similar schemes.
“These Defendants stole money from South Carolina taxpayers, they stole opportunities from those in the construction industry who did the right thing, and they stole safety from the workers who labored on jobsites without insurance,” said U.S. Attorney Corey F. Ellis. “This successful prosecution was only possible because of the tireless and dedicated investigative efforts of IRS and HSI, as well as the work of our local partners. The Defendants in this case, none of whom had criminal records before this investigation, are all now convicted felons. Several face potential deportation, several have lost their homes and face financial ruin, and many will never be able to return to the work they spent their lives pursuing. This case should be a message to businesses and individuals who try to get ahead by breaking the law: it is not worth it because we are watching you and we will prosecute you.”
“Unscrupulous businesses who willfully skirt their tax and legal workforce obligations must be held to account,” said IRS CI Special Agent in Charge Donald “Trey” Eakins. “Employers who deliberately deflect these obligations undermine what is owed to the U.S. Government in payroll taxes and other fees, in addition to creating an unfair economic advantage over law-abiding business owners who play by the rules.”
“Criminals that exploit U.S. labor and tax laws for profit take advantage of not only the workers, but they also steal revenue from the Government, while also creating an unfair business advantage over their competitors,” said Special Agent in Charge Ronnie Martinez, who oversees HSI operations in North Carolina and South Carolina. “Thanks to the great work done by our agents along with our state, local and federal partners we were able to stop this criminal organization from defrauding the Government and hurting the local economy.”
Evidence presented to the court showed that beginning around late 2018, IRS and HSI began jointly investigating the practice of illegal check cashing within the construction industry in the Myrtle Beach area and in other regions along the South Carolina coast. In approximately 2019, various IRS undercover agents embedded themselves in the Myrtle Beach area and recorded multiple interactions with the various defendants’ companies.
Specifically, certain construction companies would use check cashers so that they could hire unauthorized aliens and avoid paying employment taxes on their workers. To facilitate the scheme, a member of the construction company would meet with an unlicensed check casher in places like parking lots for retail stores or coffee shops. The construction company would give the check casher a business check in a certain amount made out to a company the check casher had created, and the check casher would give the construction company representative a bag of cash that would be used to pay the employees. In exchange for their services, the check casher held back a fee of approximately three percent.
To make it appear like the employees had valid insurance on job sites, the check casher would also provide a certificate of workers’ compensation insurance that was not actually valid for any of the construction company’s employees. The parties agreed that the check casher would, on paper, claim to be a subcontractor who provided the employees and provided insurance. However, the parties knew that the check casher provided no other services or employees to the construction company. The check casher only provided a way to hide the true nature of the scheme, to allow the construction company to hire unauthorized aliens, and to pay workers with untaxed cash.
Chief United States District Judge R. Bryan Harwell sentenced each of the Defendants to five years’ probation, with all but one sentenced to home confinement. Further, the Court ordered each Defendant to pay restitution as a result of the tax losses they caused the Government. The Court imposed the probation sentences largely because the Defendants admitted guilt early, agreed to assist authorities, paid collectively nearly a million dollars toward the approximately $3 million dollars owed to the IRS in restitution, and agreed as a condition of probation to make monthly payments – in most cases substantial payments – until the IRS is made whole. The following Defendants from the respective companies were sentenced in the case:
Daniel Lavoie Construction Services (4:21-cr-00585)
- Daniel A. Lavoie, 49, of Conway: Five years’ probation, 18 months home confinement with location monitoring, and $293,402.50 in restitution
- Enrique R. Reyes, 48, of Conway: Five years’ probation, 18 months home confinement with location monitoring, and $293,402.50 in restitution
Duran Masonry (4:21-cr-00584)
- Walter A. Duran, 45, of Myrtle Beach: Five years’ probation, 21 months home confinement with location monitoring, and $976,076.08 in restitution
- Lisa Caulley Sellers, 57, of Myrtle Beach: Five years’ probation, eight months home confinement with location monitoring, and $488,038.04 in restitution
Extreme Siding (4:21-cr-00595)
- Ming Xue Nan, 52, of Myrtle Beach: Five years’ probation, 14 months home confinement with location monitoring, and $173,712.43 in restitution
- Katherine L. Welker, 39, of Myrtle Beach: Five years’ probation, eight months home confinement with location monitoring, and $173,712.43 in restitution
Master Homes Calabash (4:21-cr-00581)
- Josafa P. Neto, 43, of Myrtle Beach: Five years’ probation, 18 months home confinement with location monitoring, and $209,847.07 in restitution
- Marylany Hardman Levino, 36, of Myrtle Beach: Five years’ probation and $209,847.07 in restitution
Metro Concrete Finishers (4:21-cr-00594)
- Saul Prieto, 56, of Myrtle Beach: Five years’ probation, nine months home confinement with location monitoring, and $74,868.50 in restitution
- Martha E. Zarate, a/k/a Martha E. Prieto, 54, of Myrtle Beach: Five years’ probation, nine months home confinement with location monitoring, and $74,868.50 in restitution
Master Homes Design Center (4:21-cr-00582)
- Marcos Caetano De Almeida, 45, of Myrtle Beach: Five years’ probation, 21 months home confinement with location monitoring, and $298,816.52 in restitution
Paint By Numbers (4:21-cr-00583)
- Johanna A. Carpio, 38, of Myrtle Beach: Five years’ probation, 14 months home confinement with location monitoring, and $131,449.69 in restitution
Each of the twelve Defendants previously pleaded guilty to an Information charging them with one felony count of conspiracy to defraud the United States and one misdemeanor count of unlawful employment of aliens.
This case was investigated by IRS and HSI, with assistance from the Myrtle Beach Police Department. Assistant U.S. Attorneys Derek A. Shoemake and Carrie Fisher prosecuted the case.