Jacksonville, Florida – A Honduran national has been sentenced to 27 months in federal prison for his involvement in a scheme that defrauded the IRS and a workers' compensation insurance company. Jose Molina-Herrera, aged 27, was sentenced by Senior U.S. District Judge Brian J. Davis for conspiracy to commit wire fraud and conspiracy to defraud the United States.
Molina-Herrera was also ordered to forfeit $867,005 as proceeds of the wire fraud offense and pay $3,558,579.42 in restitution to the IRS. He had pleaded guilty on November 1, 2024.
Court documents reveal that between 2019 and 2020, Molina-Herrera conspired with others to facilitate off-the-books payments to construction workers. This was done through All National Remodeling LLC, a shell company he formed. The scheme allowed contractors and subcontractors to avoid paying premiums for workers’ compensation insurance and payroll taxes.
In exchange for a percentage of their payrolls, Molina-Herrera distributed certificates of liability insurance under All National Remodeling's name. However, these certificates were based on fraudulent applications that did not disclose the employment of supposedly insured workers under the shell company's minimal insurance policy. Consequently, more than $2.2 million was defrauded from the insurance company.
Additionally, checks were deposited into the shell company's accounts and cash withdrawn without withholding or paying payroll taxes to the IRS. This resulted in over $14 million being paid without tax deductions, causing a loss of more than $3.5 million in tax receipts for the U.S. Treasury.
Oscar Molina-Avila, one of Molina-Herrera’s co-conspirators, had previously received a sentence of 52 months imprisonment for his role in this operation.
Ron Loecker from IRS-Criminal Investigation's Tampa Field Office commented on the case: “Using shell companies to pay workers under the table is not only illegal; it gives an unfair competitive advantage that businesses who do things the right way can’t match.”
Tim Hemker from Homeland Security Investigations added: “Wire fraud and facilitation of 'off-the-books' payments undermine our legal and economic systems.”
The investigation involved multiple agencies including Internal Revenue Service—Criminal Investigation, Homeland Security Investigations, and Florida Department of Financial Services – Bureau of Insurance Fraud with prosecution led by Assistant United States Attorney Michael J. Coolican.