Twelve people across seven construction-related companies have pleaded guilty to charges related to employment tax fraud and hiring unauthorized aliens in what acting U.S. Attorney M. Rhett DeHart called the largest criminal Internal Revenue Service operation ever in the Pee Dee region.
The pleas are the first to come from a multi-year undercover investigation in the Myrtle Beach area and throughout the S.C. coast led by the IRS and Homeland Security Investigations, according to a news release from the district office of the U.S. attorney.
The operation targeted those in the construction industry who used unlicensed check cashers to facilitate under-the-table cash payments to employees, many of whom were living in the country illegally, the news release said.
The government also says the check cashers would provide certificates of insurance falsely stating that the employees were covered under workers’ compensation insurance. These off-the-book payments defrauded the United States out of applicable employment taxes on the employees, investigators said.
Each of the 12 defendants pleaded guilty to one felony count of conspiracy to defraud the United States and one misdemeanor count of unlawful employment of aliens. At least $15 million in checks were cashed by these defendants, resulting in millions of dollars of total losses to the government. Based on the investigation, the U.S. attorney’s office says at least “tens of millions” of dollars of tax losses have occurred throughout the S.C. coast because of similar schemes.
“Those who steal from the government, and by extension the American taxpayers, will not find refuge in South Carolina,” DeHart said in the release. “By evading millions of dollars in taxes and falsely claiming their workers had insurance, these defendants made it harder for honest business owners to compete in the construction industry along South Carolina’s coast and they left their workers exposed to injury without insurance. I want to thank the IRS and HSI for their tireless efforts, as well as our local partners who assisted during this operation. We will continue to prosecute businesses and individuals who try to get ahead by breaking the law.”
Evidence presented to the court said that beginning around late 2018, IRS and HSI began jointly investigating the practice of illegal check cashing within the construction industry in the Myrtle Beach area and in other regions along the coast.
Specifically, certain construction companies would use check cashers so that they could hire unauthorized workers and avoid paying employment taxes on those workers. A member of the construction company would meet with an unlicensed check casher and give the check casher a business check in a certain amount made out to a company the check casher had created, and the check casher would give the construction company representative a bag of cash that would be used to pay the employees, according to the release. In exchange for their services, the check casher took a fee of approximately 3%.
To make it appear like the employees had valid insurance on job sites, the check casher would also provide a certificate of workers’ compensation insurance that was not actually valid for any of the construction company’s employees, the news release said. The parties agreed that the check casher would, on paper, claim to be a subcontractor who provided the employees and provided insurance.
“IRS Criminal Investigation realizes the detrimental consequences of employment tax evasion,” Mona Passmore, acting special agent in charge, IRS Criminal Investigation, said in the release. “These defendants mistakenly believed they could disregard their tax obligations and gain a competitive advantage while doing so. They underestimated our vigorous pursuit of justice and dedication to closing the tax gap. We will continue to hold criminals accountable for their role in these schemes.”
Those pleading guilty in the operation include:
- Daniel A. Lavoie, 49, of Conway, Daniel Lavoie Construction Services
- Enrique R. Reyes, 48, of Conway, Daniel Lavoie Construction Services
- Walter A. Duran, 45, of Myrtle Beach, Duran Masonry
- Lisa Caulley Sellers, 57, of Myrtle Beach, Duran Masonry
- Ming Xue Nan, 52, of Myrtle Beach, Extreme Siding
- Katherine L. Welker, 39, of Myrtle Beach, Extreme Siding
- Marylany Hardman Levino, 36, of Myrtle Beach, Master Homes Calabash
- Josafa P. Neto, 43, of Myrtle Beach, Master Homes Calabash
- Saul Prieto, 56, of Myrtle Beach, Metro Concrete Finishers
- Martha E. Zarate, a/k/a Martha E. Prieto, 54, of Myrtle Beach, Metro Concrete Finishers
- Marcos Caetano De Almeida, 45, of Myrtle Beach, Master Homes Design Center
- Johanna A. Carpio, 38, of Myrtle Beach, Paint By Numbers
Each faces a maximum penalty of five years in federal prison for conspiracy to defraud the United States, and six months in federal prison for unlawful employment of aliens, according to the U.S. attorney’s office. Each defendant also faces a fine of up to $250,000 and $3,000 for each unauthorized worker, and three years of supervision to follow the term of imprisonment. Each defendant has agreed to make restitution to the IRS, for a total restitution amount of just under $3 million.
Chief United States District Judge R. Bryan Harwell accepted each of the guilty pleas and will sentence the defendants after receiving and reviewing a sentencing report prepared by the U.S. Probation Office.
This case was investigated by IRS and HSI, with assistance from the Myrtle Beach Police Department. Assistant U.S. attorneys Derek A. Shoemake and Carrie Fisher are prosecuting the case.