Carolina Investigation Busts Contractors for Tax Evasion, False Insurance Certificates

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For three years, undercover investigators watched as construction company owners in South Carolina met with a check-cashing company in parking lots, then walk away with bags of cash and fake insurance certificates, showing laborers were covered by workers’ compensation insurance.

Tuesday, federal prosecutors announced that 12 of those construction firm owners and managers have pleaded guilty to tax fraud and to hiring illegal immigrants in the Myrtle Beach area.

Acting U.S. Attorney Rhett DeHart

“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,” Acting U.S. Attorney Rhett DeHart said in a news release. Investigators with the Internal Revenue Service and with the U.S. Department of Homeland Security also worked the investigation.

Prosecutors said that the contractor firms cashed more than $15 million in checks with the illicit check-cashing services over the last few years. The scheme often worked like this, authorities said: A construction company would give the check casher a business check 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. In exchange for their services, the check casher held back a fee of about 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 parties agreed that the check casher would, on paper, claim to be a subcontractor who provided the employees and provided insurance, prosecutors said.

The charges carry a potential prison sentence of five years, a fine of up to $250,000 and an additional $3,000 fine for each employee who entered the country illegally, the U.S. Attorney’s office said. As part of their plea agreements, the defendants must pay back the money they owe to the IRS, amounting to almost $3 million in restitution.


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