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JACKSONVILLE, Fla. — A Homeland Security Investigations (HSI) Jacksonville investigation led to the sentencing of Oscar Molina-Avila to four years and four months in federal prison for conspiracy to commit wire fraud and conspiracy to defraud the U.S. to impede the lawful functions of the Internal Revenue Service (IRS).
As part of his sentence, the court ordered Molina-Avila to pay more than $5.4 million in restitution to his victims, specifically, $2,111,151 to a workers’ compensation insurance company and $3,330,596.42 to the IRS. The court also entered an order of forfeiture in the amount of $2,111,151, the proceeds of the wire fraud conspiracy. Molina-Avila pleaded guilty on Feb. 3, 2021.
“This criminal evaded workers’ compensation premiums, avoided paying employment taxes and brokered bulk-cash drops through fraud against the government, private industry and America’s workforce, resulting in illicit profits and proceeds in the millions of dollars,” said K. Jim Phillips, assistant special agent in charge of HSI Jacksonville. “Thanks to the dedication of HSI special agents, IRS Criminal Investigation (IRS-CI) and the Florida Department of Financial Services, this criminal will now be held accountable for his complete disregard of U.S. laws.”
According to court documents, Molina-Avila conspired with others between 2016 and 2020 to facilitate paying construction workers “off the books” to avoid paying premiums for workers’ compensation insurance and payroll taxes. Construction contractors and subcontractors entered arrangements with Molina-Avila and his co-conspirators, through which shell companies facilitated the distribution of proof of insurance and the payment of workers with cash. In exchange for 6% to 8% of the contractors’ and subcontractors’ payroll, Molina-Avila and others caused the distribution of certificates of liability insurance in the names of the shell companies, which contractors and subcontractors then used as false proof they were insured.
The shell companies’ insurance policies were issued based on fraudulent applications that never disclosed that contractors and subcontractors would employ workers who were ostensibly insured under the shell companies’ bare-bones insurance policies. As a result of contractors and subcontractors using the shell companies’ proof of insurance but never paying any insurance premiums, insurers were defrauded out more than $10 million.
Molina-Avila and others also facilitated the deposit of checks into the shell companies’ bank accounts, as well as the withdrawal of cash to be paid to the employees of the contractors and subcontractors — all without withholding or paying payroll taxes to the IRS. Through these arrangements with Molina-Avila, the construction contractors and subcontractors could disclaim responsibility for withholding and paying payroll taxes to the IRS or ensuring that the workers were legally authorized to work in the United States. By facilitating the payment of workers of more than $49 million without payroll taxes being withheld, Molina-Avila and his co-conspirators caused the U.S. Treasury to lose more than $12 million in tax receipts.
“Payroll taxes are an integral source of funding for government programs such as Social Security and Medicare. Today’s sentencing proves that those who shamefully choose to perpetrate payroll tax schemes will be thwarted and brought to justice,” said Ronald A. Loecker, IRS-CI acting special agent in charge. “IRS-CI actively investigates these schemes to ensure cheaters do not gain a competitive edge over those who comply with our nation’s tax laws.”
The shell companies used in the scheme included All National Remodeling, El Boqueron Construction, La Fuente Construction, Goyos Construction Services and Universal Florida Construction.
HSI, with assistance from IRS-CI and the Florida Department of Financial Services, investigated the case, and Assistant U.S. Attorney Michael J. Coolican prosecuted it. Assistant U.S. Attorney Mai Tran is handling the forfeiture.
HSI is the principal investigative arm of the Department of Homeland Security (DHS), responsible for investigating transnational crime and threats, specifically those criminal organizations that exploit the global infrastructure through which international trade, travel and finance move. HSI’s workforce of over 10,400 employees consists of more than 6,800 special agents assigned to 225 cities throughout the United States, and 93 overseas locations in 56 countries. HSI’s international presence represents DHS’ largest investigative law enforcement presence abroad and one of the largest international footprints in U.S. law enforcement.
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