Construction Company President Charged With $5 Million Payroll Tax And Wire Fraud Schemes

United States Attorney for the Southern District of New York, Jay Clayton, and Special Agent in Charge of the New York Field Office of Internal Revenue Service-Criminal Investigation (“IRS-CI”), Harry T. Chavis, Jr., announced the unsealing of a 14-count Complaint charging NIGEL KENNETH JOSEPH with failing to pay years of employee payroll taxes, scheming to defraud a construction contractor of millions of dollars, and aggravated identify theft.  JOSEPH was arrested and presented yesterday before U.S. Magistrate Judge Ona T. Wang.

“As alleged, Nigel Joseph didn’t just shortchange his workers—he lied about it, falsified records, and pocketed the money for himself,” said U.S. Attorney Jay Clayton.  “Then he allegedly defrauded the public by ducking millions in taxes. That’s not entrepreneurship that fuels growth—it’s fraud that erodes trust.”

“When a person purportedly leases luxury vehicles, buys NBA tickets and travels to tropical islands instead of paying payroll taxes for his employees, it is the American people who are victimized,” said IRS-CI Special Agent in Charge Harry T. Chavis, Jr.  “There is no turning a blind eye to this egregious fraud, and our CI agents work relentlessly to follow the money and bring those who think they can evade payroll taxes and falsify records to justice.”

According to the allegations in the Complaint:^[[1]]

JOSEPH founded BWK, a masonry subcontractor registered in the Bronx, New York, in 2019.  Between 2019 and 2021, BWK earned at least $10 million performing construction across New York, New Jersey, and Connecticut.  Despite these earnings, JOSEPH willfully refused to collect payroll taxes from his employees and refused to pay taxes he owed as an employer. According to an IRS-CI analysis of financial records, JOSEPH failed to pay at least approximately $2.9 million on behalf of his employees and at least approximately $750,000 he owed as an employer. Rather than pay taxes, JOSEPH used BWK funds to finance his own lifestyle—including by transferring tens of thousands of dollars to his wife; making personal rental payments; purchasing courtside NBA tickets and a Rolex; leasing a BMW 3-Series, a Mercedes GLE, and a BMW 5-Series; and traveling to the Dominican Republic and Jamaica.

According to interviews with employees and business partners, JOSEPH said, in sum and substance, that he did not want to file taxes and sometimes refused to speak to an accountant because he did not want to talk about how much he owed to the Government.  An employee said that JOSEPH chose to not collect or file taxes because the IRS was, JOSEPH said in sum and substance, not paying attention during the COVID-19 pandemic.

Moreover, because JOSEPH knew that payroll taxes had not been properly withheld by BWK, JOSEPH also directed the production of falsified certified payroll documents in order to obtain approximately $1.96 million in payments pursuant to at least two construction contracts.  According to documents reviewed and interviews conducted by IRS-CI, JOSEPH conspired with others to produce falsified documents listing the names, hours worked, wages, and tax withholdings for at least approximately 10 employees between in or about October 2021 and June 2022 in order to obtain payment for performing masonry work as part of two elementary school construction projects on Long Island.

In order to falsify payroll documents as part of the scheme, on or about November 17, 2021, JOSEPH texted an employee instructions to “Put [an employee], [another employee], yourself and one other laborer” as employees on a construction site where the employee—who performed only payroll functions for BWK—in fact never worked.  In a text message he sent on or about November 8, 2021, JOSEPH directed an employee to identify JOSEPH as a “foreman”; JOSEPH’s wife as a “laborer”; and two other employees as “laborers.”  In fact, JOSEPH was not a foreman; his wife was not a laborer; and neither of the other two employees were laborers, either.

In a text message sent on or about February 3, 2022, JOSEPH expressed concern that the falsified certifications would be uncovered, writing in response to a warning from an employee that “[w]e have big problems . . . [w]ith the taxes,” that, “Damn . . . I’m thinking I should not have put everyone working 35 hours every week.”  On or about March 28, 2022, JOSEPH directed an employee in text messages that “this is going to be the last month that we do this with [the] accountant . . . [a]nd then you and I gonna do it ourselves,” adding that he would “fake it until we make it.”

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JOSEPH, 45, of Bergenfield, New Jersey, is charged with 11 counts of failure to account for and pay over payroll taxes, each of which carries a maximum sentence of five years in prison; one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison; one count of wire fraud, which carries a maximum sentence of 20 years in prison; and one count of aggravated identity theft, which carries a mandatory sentence of two years in prison.

The mandatory and maximum potential sentences in this case are prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendant will be determined by a judge.

Mr. Clayton praised the outstanding investigative work of IRS–CI.

This case is being handled by the Office’s General Crimes Unit.  Assistant U.S. Attorney Ryan T. Nees is in charge of the prosecution.

The charges contained in the Complaint are merely accusations, and the defendant is presumed innocent unless and until proven guilty.