MIAMI – Axel Rafael Mercado pleaded guilty to one count of tax evasion before U.S. District Court Judge Patricia A. Seitz in the Southern District of Florida, the Department of Justice and the Internal Revenue Service (IRS) announced today. The court set sentencing for Jan. 13, 2011.
According to court documents, from 2005 through 2007, Mercado, who owns Mercado Enterprises Inc., attempted to evade a large part of his company’s federal employment taxes. To avoid his employment tax obligations, Mercado would have checks written to shell companies that were supposedly legitimate subcontractors hired to do work for Mercado Enterprises, but which in fact did no work. Mercado would then have those checks cashed at a local check-cashing store that was aware of the scheme and would use the cash to pay his workers.
Additionally, Mercado had checks written to a legitimate construction company, but that company also performed no work. Mercado did not report, withhold or pay the employment taxes on any of these cash wages. Mercado also caused his company to fail to file employment tax returns.
Mercado pleaded guilty to a one-count information charging him with tax evasion. All told, Mercado’s actions resulted in a tax loss of at least $352,605. Mercado faces a maximum of five years in prison and has agreed to pay restitution to the IRS of $352,605.
Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida, and John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division, commended the IRS Special Agents who investigated this case and Tax Division Trial Attorneys Jason H. Poole and Matthew J. Mueller, who prosecuted the case.
Source: US Department of Justice
