Two US men plead guilty over roles in off-the-books construction payroll scheme

The US Office of Public Affairs said that Michael Mayorga and Francisco Alvarez conspired with others to operate an illegal, off-the-books cash payroll system for construction workers.

The scheme was set up to avoid paying employment taxes to the Inland Revenue Service (IRS) and to defraud workers’ compensation insurance companies. Mayorga and Alvarez also facilitated the employment of undocumented aliens working illegally in the United States.

From 2015 to 2022, Alvarez and Mayorga and their co-conspirators created a series of shell companies to run an unlicensed check cashing and cash courier service business that cashed approximately $89 million in checks from subcontractors in the construction industry.

The subcontractors used the cash to pay their workers. Mayorga provided bookkeeping and tax preparation services for some of the shell companies, and Alvarez and others facilitated the distribution of millions in cash to subcontractors.

Mayorga also prepared false returns for the shell companies and members of the conspiracy that Alvarez, and others, filed.

In total Mayorga caused a tax loss to the IRS of $8,647,824.

In total Alvarez caused a tax loss to the IRS of $2,331,731.

In addition to the tax crimes, Alvarez filed a false worker’s compensation insurance application. This allowed the shell companies to pay small insurance premiums. After fraudulently getting the insurance, Alvarez “rented” it to subcontractors so that the subcontractors could falsely provide proof of insurance when placing bids with contractors. Mayorga also provided false documents to insurance companies auditing them.

Alvarez and Mayorga will be sentenced at a later date. They each face a maximum penalty of five years in prison.

The two men pleaded guilty today before Magistrate Judge Leslie Hoffman Price for the Middle District of Florida for their roles in the scheme. The pleas must be accepted by a U.S. district court judge.