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Jacksonville Siblings Sentenced for Workers’ Compensation Fraud and Employing Undocumented Aliens

jacksonville-77804_1920-300x179A Jacksonville, Florida brother and sister have been sentenced for their role in a scheme to illegally employ undocumented immigrants in construction work. Their scheme involved avoiding millions of dollars in workers’ compensation insurance and payroll tax.

Fanny Melina Zelaya-Mendez, age 39, and Roger Omar Zelaya-Mendez, age 34, ran various shell companies which provided workers to contractors and subcontractors. They used these companies to hire and pay hundreds of undocumented immigrants. Since the contractors and subcontractors paid the workers through these shell companies, they were therefore able to avoid being responsible for making sure that the workers were authorized to work in the country, that the workers had workers’ compensation insurance coverage, and that the appropriate payroll taxes were being paid.

With a few exceptions, Florida law states that all employers must maintain adequate workers’ compensation insurance coverage for their workers. As part of their scheme, the Zelaya-Mendezes claimed their shell companies only had a small number of employees, even though they in fact employed hundreds of undocumented immigrants.

As a result, the siblings only paid a limited amount of workers’ compensation insurance coverage. The Zelaya-Mendezes claimed that their businesses had between $85,800 and $120,800 in payroll each. This equated to annual premiums for each those companies of between $16,787 and $27,581. The Zelaya-Mendezes then “rented” these workers’ compensation policies to the contractors and subcontractors they worked with.

These contractors and subcontractors then wrote their payroll checks to the shell companies. The siblings cashed the checks, disbursing 96 percent of the money to crew leaders who then paid the undocumented immigrants in cash. The Zelaya-Mendezes retained the remaining 4 percent as their “rental fee.”

Between June 2016 and April 2018, $26,979,514 passed through shell companies owned by the Zelaya-Mendezes. The siblings collected $1,075,180 in fees for themselves. Had the Zelaya-Mendezes paid the correct amount of workers’ compensation insurance for their employees, their policy would have totaled $6,683,481. In addition, the siblings did not remit payroll taxes to the Internal Revenue Service.

Roger Omar Zelaya-Mendez and Fanny Melina Zelaya-Mendez, both citizens of Honduras, are themselves in the United States without permission. Roger has previously been deported twice, once on February 13, 2009, and again on July 20, 2012.

The case against the Zelaya-Mendezes was investigated by the Internal Revenue Service—Criminal Investigation together with the Homeland Security Investigations division of U.S. Immigration and Customs Enforcement. Fanny Melina Zelaya-Mendez faced one count of conspiracy to defraud the IRS, three counts of conspiracy to commit wire fraud, and one count of aggravated identity theft. Roger Zelaya-Mendez faced one count of conspiracy to defraud the IRS, one count of conspiracy to commit wire fraud, and one count of illegally reentering the United States after a prior deportation. Each of the wire fraud charges carried a maximum sentence of 20 years in federal prison.

The Zelaya-Mendezes pleaded guilty to all the charges. At sentencing, Fanny Zelaya-Mendez was given four years in federal prison. Roger Zelaya-Mendez was sentenced to two years. In addition, United States District Judge Brian Davis ordered that the Zelaya-Mendezes were to forfeit the two vehicles seized during the investigation together with $399,776.43 in cash.

Florida Workers’ Compensation Fraud Defense Attorney

If you are involved in a worker’s compensation fraud investigation, then you should hire a lawyer. Contact us to set up a free initial consultation and work with one of Florida’s most experienced workers’ compensation fraud defense attorneys.

Sources

2019-01-30 Jacksonville Siblings Sentenced for Employing Undocumented Aliens, Evading Millions in Taxes

2018-05-08 Two Honduran Citizens Indicted for Scheme to Facilitate Employment of Undocumented Aliens in Construction Industry and Evasion of Payroll Taxes and Workers’ Compensation Laws