U.S. Attorney Roger B. Handberg | U.S. Department of Justice
United States District Judge Wendy W. Berger has sentenced Pablo Isila Euceda-Hernandez, a Honduran national residing illegally in the United States, to 27 months in federal prison. Euceda-Hernandez was convicted for conspiracy to commit wire fraud and tax fraud. He has been ordered to pay restitution of $1,214,508 to the IRS and a money judgment of $336,029 representing proceeds from the wire fraud.
Court documents reveal that Euceda-Hernandez established a shell company ostensibly involved in construction. He obtained workers' compensation insurance under this company’s name to cover minimal payroll for a few employees. The insurance was then "rented" out to work crews with subcontracts from construction contractors across various Florida counties and other states. Euceda-Hernandez provided certificates as "proof" of insurance coverage, falsely claiming the work crews were employed by his shell company.
Throughout this scheme, numerous work crews received these certificates allowing undocumented workers to be unlawfully employed. Contractors issued payroll checks which Euceda-Hernandez cashed before distributing cash payments minus a fee usually around 6% of the payroll total. Over time, he cashed approximately $5 million worth of payroll checks without reporting or paying required payroll taxes including Social Security and Medicare.
The fraudulent activity also circumvented higher costs associated with proper workers’ compensation insurance for actual payrolls totaling about $5 million—far exceeding the estimated $169,400 on which Euceda-Hernandez's policy was based.
“Under-the-table cash payroll schemes...jeopardizes the integrity of the construction industry," stated Tim Hemker from Homeland Security Investigations Jacksonville office. Ron Loecker from IRS-Criminal Investigation’s Tampa Field Office added that such actions undermine fair business practices: “This defendant cheated...and will now contemplate their actions from prison.”
The investigation involved Homeland Security Investigations, IRS Criminal Investigation, and Florida Department of Financial Services; prosecution was led by Assistant United States Attorney John Cannizzaro.