United States District Judge Wendy W. Berger has sentenced Pablo Isila Euceda-Hernandez, a 36-year-old Honduran national illegally residing in the United States, to 27 months in federal prison. Euceda-Hernandez was convicted of conspiracy to commit wire fraud and tax fraud. The court ordered him to pay $1,214,508 in restitution to the IRS and entered a money judgment of $336,029 against him.
Court documents revealed that Euceda-Hernandez created a shell company claiming involvement in the construction industry. He acquired a workers' compensation insurance policy for this company with minimal payroll coverage for a few supposed employees. He then "rented" this insurance to work crews subcontracted by construction contractors across Florida and other states. By issuing certificates as proof of insurance, he misrepresented that these crews were employed by his shell company.
Euceda-Hernandez's scheme involved cashing payroll checks from contractors totaling approximately $5 million. He distributed the cash to work crews after deducting about 6% as his fee. Neither the shell company nor the contractors reported wages or paid payroll taxes, including Social Security and Medicare taxes.
The fraudulent scheme allowed contractors to avoid higher costs associated with proper workers' compensation insurance for their workers. The insurance policy purchased by Euceda-Hernandez covered an estimated payroll of $169,400 with a premium of about $11,352. In reality, had appropriate coverage been obtained for actual payrolls amounting to around $5 million, premiums would have reached approximately $591,978.
Tim Hemker from Homeland Security Investigations (HSI) Jacksonville stated: "Under-the-table cash payroll schemes... jeopardize the integrity of the construction industry and undermine... legal standards." Ron Loecker from IRS-Criminal Investigation’s Tampa Field Office commented: "This defendant cheated... U.S. taxpayers... [and] will now contemplate their actions from prison."
The investigation was conducted by Homeland Security Investigations, IRS-Criminal Investigation, and Florida Department of Financial Services. Assistant United States Attorney John Cannizzaro prosecuted the case.