Twelve Plead Guilty to Tax and Immigration Charges after Undercover Operation Marking Largest Criminal Tax Case in Pee Dee History
Florence, S.C (STL.News) Acting United States Attorney M. Rhett DeHart announced today that 12 individuals across seven construction-related companies have pleaded guilty to charges related to employment tax fraud and hiring unauthorized aliens in the largest criminal Internal Revenue Service (IRS) operation in the history of the Pee Dee region. The pleas are the first to come from an expansive multi-year undercover investigation in the Myrtle Beach area and throughout the South Carolina coast led by the IRS and Homeland Security Investigations (HSI).
The operation targeted those in the construction industry who used unlicensed check cashers to facilitate under-the-table cash payments to employees, many of whom were unauthorized aliens. The check cashers would also provide certificates of insurance falsely stating that the employees were covered under workers’ compensation insurance. These off-the-book payments defrauded the United States out of applicable employment taxes on the employees.
Each of the twelve defendants pleaded guilty to an information charging them with one felony count of conspiracy to defraud the United States and one misdemeanor count of unlawful employment of aliens. At least $15 million in checks were cashed by these defendants, resulting in millions of dollars of total losses to the Government. Based on the investigation, at least tens of millions of dollars of tax losses have occurred throughout the South Carolina coast because of similar schemes.
“Those who steal from the Government, and by extension the American taxpayers, will not find refuge in South Carolina,” said Acting U.S. Attorney 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. I want to thank the IRS and HSI for their tireless efforts, as well as our local partners who assisted during this operation. We will continue to prosecute businesses and individuals who try to get ahead by breaking the law.”
“IRS Criminal Investigation realizes the detrimental consequences of employment tax evasion. These defendants mistakenly believed they could disregard their tax obligations and gain a competitive advantage while doing so,” said Mona Passmore, Acting Special Agent in Charge, IRS Criminal Investigation. “They underestimated our vigorous pursuit of justice and dedication to closing the tax gap. We will continue to hold criminals accountable for their role in these schemes.”
“The biggest misconception about labor exploitation is that it’s a victimless crime and that couldn’t be further from the truth. Workers, competing businesses, people who have their identities stolen and even the local economy are all victims of this crime,” said Special Agent in Charge Ronnie Martinez, who oversees HSI operations in North Carolina and South Carolina. “This case is shedding light on a crime that has happened in the shadows for too long and HSI and its partners will continue to hold accountable those involved in labor exploitation.”
Evidence presented to the court showed that beginning around late 2018, IRS and HSI began jointly investigating the practice of illegal check cashing within the construction industry in the Myrtle Beach area and in other regions along the South Carolina coast. Specifically, certain construction companies would use check cashers so that they could hire unauthorized aliens and avoid paying employment taxes on their workers. To facilitate the scheme, a member of the construction company would meet with an unlicensed check casher in places like parking lots for retail stores or coffee shops.
The construction company would give the check casher a business check in a certain amount 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 approximately three percent.
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. However, the parties knew that the check casher provided no other services or employees to the construction company. The check casher only provided a way to hide the true nature of the scheme, to allow the construction company to hire unauthorized aliens, and to pay workers with untaxed cash.
In approximately 2019, various IRS undercover agents embedded themselves in the Myrtle Beach area and recorded multiple interactions with the various defendants’ companies.
The following defendants from the following companies have pled guilty so far in the operation:
Daniel Lavoie Construction Services
Daniel A. Lavoie, 49, of Conway (4:21-cr-00585)
Enrique R. Reyes, 48, of Conway (4:21-cr-00585)
Walter A. Duran, 45, of Myrtle Beach (4:21-cr-00584)
Lisa Caulley Sellers, 57, of Myrtle Beach (4:21-cr-00584)
Ming Xue Nan, 52, of Myrtle Beach (4:21-cr-00595)
Katherine L. Welker, 39, of Myrtle Beach (4:21-cr-00595)
Master Homes Calabash
Marylany Hardman Levino, 36, of Myrtle Beach (4:21-cr-00581)
Josafa P. Neto, 43, of Myrtle Beach (4:21-cr-00581)
Metro Concrete Finishers
Saul Prieto, 56, of Myrtle Beach (4:21-cr-00594)
Martha E. Zarate, a/k/a Martha E. Prieto, 54, of Myrtle Beach (4:21-cr-00594)
Master Homes Design Center
Marcos Caetano De Almeida, 45, of Myrtle Beach (4:21-cr-00582)
Paint By Numbers
Johanna A. Carpio, 38, of Myrtle Beach (4:21-cr-00583)
Each defendant faces a maximum penalty of five years in federal prison for conspiracy to defraud the United States, and six months in federal prison for unlawful employment of aliens. Each defendant also faces a fine of up to $250,000 and $3,000 for each unauthorized alien, and 3 years of supervision to follow the term of imprisonment. Each defendant has agreed to make restitution to the IRS, for a total restitution amount of just under $3 million. Chief United States District Judge R. Bryan Harwell accepted each of the guilty pleas and will sentence the defendants after receiving and reviewing a sentencing report prepared by the United States Probation Office.
This case was investigated by IRS and HSI, with assistance from the Myrtle Beach Police Department. Assistant United States Attorneys Derek A. Shoemake and Carrie Fisher are prosecuting the case.