Two Rhode Island contractors who operated a drywall subcontracting business that performed jobs for large construction companies and projects are named in a 28-count federal indictment for allegedly executing schemes to avoid paying federal taxes.
Jesus Jose Mendez, 43, and Jamie Zambrano, 35, both of Woonsocket, RI, are charged with conspiracy to defraud the United States, failure to collect and pay employment taxes, tax evasion, structuring financial transactions to avoid reporting requirements, and wire fraud.
According to the indictment, Mendez and Zambrano are the operators of J&J Drywall, Inc., which later became known as Empire, Inc. From 2013 to 2017, the pair are accused of using check cashing businesses to cash more than 600 business receipts totaling more than $16 million. The indictment alleges that they conspired to pay a significant portion of their workers, many of whom were illegal immigrants, in cash. Payroll funds were allegedly delivered to jobsites in backpacks. Only a small number of Empire’s employees were paid via official payroll, according to the indictment.
They are further accused of making more than $4 million in deposits into the company’s bank accounts. They reportedly made more than 120 cash deposits of between $9,000 and $10,000, often times on consecutive days. Many of the deposits were structured in amounts less than $10,000 and were often in the exact amount of $9,900 in order to avoid federal reporting requirements by financial institutions.
Zambrano and Mendez allegedly filed forms with the IRS and Massachusetts Department of Unemployment Assistance reporting wages paid between 2013 and 2017 totaling $4.3 million, when in reality the company reportedly received roughly $20.1 million in gross receipts.
Mendez was arraigned in Providence on Monday and was released in lieu of an unsecured bond. An arrest warrant has been issued for Zambrano. The press release announcing the indictment did not name attorneys for the defendants.
South Florida Fraud Defense Attorney
Source: 10.27.20 businessmen indicted in multi-million dollar scheme to avoid federal employment taxes.pdf