Friday, September 26, 2008

Undocumented Immigrants evading taxes?

A North Dartmouth woman was sentenced today in federal court after being convicted on charges of paying out more than $40 million in cash wages through their temporary employment agency in order to evade millions of dollars in tax payments and workers compensation insurance premiums.

United States Attorney Michael J. Sullivan; Tyrone G. Barney, Special Agent in Charge of the U.S. Internal Revenue Service, Criminal Investigation - Boston Field Office; Warren T. Bamford, Special Agent in Charge of the Federal Bureau of Investigation - Boston Field Office; and Anthony DiPaolo, Chief of Investigations for the Insurance Fraud Bureau of Massachusetts, announced that AIMEE KING MCELROYof North Dartmouth, Massachusetts, was sentenced to 78 months imprisonment, to be followed by 3 years of supervised release. In addition, KING MCELROY was ordered to pay $9,103,335 million dollars in restitution.

In February 2008, KING MCELROY and her husband, DANIEL W. MCELROY, were convicted, following a 2 ½ week jury trial, of conspiring to defraud the IRS and their workers compensation insurers, three counts of mail fraud, and fourteen counts of procuring false payroll tax returns. DANIEL W. MCELROY was previously sentenced to 108 months imprisonment, to be followed by 3 years supervised release and the same restitution.

It was revealed at trial that from the early-1990's to June 2001, the MCELROYS operated a temporary employment agency, which was based in Taunton and later in Easton, Massachusetts, that did business under the names the Dan Agency, the Daily Agency, Daily A. King Labor, Inc., Pro Temp. Company, PTC and Precission (sic) Temp. Corp. To avoid paying employment taxes, such as Social Security and Medicare, and to fraudulently reduce the businesses’ insurance premiums for workers compensation insurance, the defendants arranged to pay a large share of the businesses’ payroll in cash. In excess of $43 million in unreported cash was paid out to employees as a result of the scheme. This represents the largest under-the-table payroll scheme ever prosecuted in Massachusetts. The hidden payroll resulted in a loss of approximately $10 million to the IRS and approximately $7 million to workers compensation insurance companies.

The agencies provided hundreds of laborers to factories and food processing business throughout Eastern Massachusetts, especially in fish processing plants on the New Bedford waterfront, where roughly a third of their employees worked. Like every other employer, the defendants were required to pay payroll (or FICA) taxes on their payroll, and to obtain workers compensation insurance. The amounts a business pays in payroll taxes and workers compensation insurance premiums are based largely on the size of its payroll.

The defendants were subject to a court order issued by The Honorable Rya Zobel in 1994 that forbade them and their agency from paying cash to their employees. The judgment was a result of a civil action brought by the United States Department of Labor. Judge Zobel’s Order prompted the defendants to take additional measures to conceal their payroll. Most of all, they established a straw corporation called ProTemp Co. through which they funneled most of their cash payroll. Later, they opened another straw corporation called Precission (sic) Temp, Co. for the same purpose.

Although nominally separate, Daily A. King, ProTemp and Precission Temp were run as a single business. To disguise their ownership and control of the ProTemp and Precission Temp, the defendants installed two of their employees, Dich Trieu and Xieu Van Son, as the nominal presidents of the two companies. The defendants also veiled their control of the two companies by directing their in-house accountant, Charles Wallace, to file false tax returns in the names of the three businesses that omitted the company’s cash payroll. To mislead their insurance auditors, Wallace, at the defendant’s direction, fabricated payroll records that reflected a smaller payroll than even that reported in the false tax returns filed.

KING MCELROY was ordered to self-report to the Bureau of Prisons on December 2, 2008.

1 comment:

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