True Payroll Crime Stories

.https://www.businesswire.com/news/home/20240529393008/en/Payroll-Sector-Benefiting-from-Technology-Led-Progression-Reveals-Annual-CloudPay-Payroll-Efficient-Index-Report https://www.timetrakgo.com/signmeup?utm_source=SMB24&utm_medium=IAP&utm_id=SBM24 https://constructioncitizen.com/blog/shell-company-operators-sentenced-multi-million-dollar-wire-and-payroll-fraud-scheme/2311091 Chief United States District Court Judge Timothy J. Corrigan sentenced two Honduran nationals, Omar Wilkin Santos-Calix and Oscar Rene Santos-Santos, to 24 months in federal prison for wire and tax fraud conspiracies. Santos-Calix must pay $3,245,161 in IRS restitution and $897,870 in a money judgment, while Santos-Santos owes $1,773,429 in IRS restitution and $490,634 in a money judgment. **Key Points:**- Santos-Calix and Santos-Santos established a fake construction company to perpetrate their scheme.- They acquired minimal workers' compensation insurance and "rented" it to work crews.- The duo cashed payroll checks issued by contractors, deducting a 6% fee before distributing cash to the crews, totaling approximately $19 million.- Neither the shell companies nor contractors reported wages to authorities or paid payroll taxes, resulting in a $5,018,590 tax liability.- The scheme evaded higher insurance costs by purchasing policies for $21,000 instead of the required $2.5 million.- Investigation and prosecution were conducted by Homeland Security Investigations (HSI), IRS-CI, and the Florida Department of Financial Services. **Prevention Measures:**- Implement thorough background checks on individuals involved in establishing businesses and issuing workers' compensation insurance.- Conduct regular audits and inspections of businesses' financial records and tax filings to identify fraudulent activities.- Enforce tax laws and regulations more strictly, with collaboration between government agencies and law enforcement to deter similar fraudulent activities in the future.