CONSTRUCTION BUSINESS OWNER PLEADS GUILTY TO PAYING EMPLOYEES OFF- THE- BOOKS

Because of the tight economy many workers overlook some of the anomalies in their pay stubs in order to keep their jobs. Paying employees off-the-books to avoid paying taxes is one way that many companies are cutting corners. The following excerpt is from the Department of Justice website:

Tuesday, September 6, 2011
Miami Construction Business Owner Pleads Guilty to Tax Fraud
WASHINGTON – Braynert Marquez of Miami pleaded guilty to a one-count information charging him with aiding and assisting in the preparation and filing of a false employment tax return, the Justice Department and the Internal Revenue Service (IRS) announced today.

According to the plea agreement and information, Marquez operated and at least partly owned two Dade County, Fla., construction companies known as Bema Block Corp. and Bema Group Corp. From 2004 through 2007, Marquez paid employees of Bema Block and Bema Group “off-the-books” wages in two different ways. First, from late 2006 through 2007, Marquez obtained cash to pay his employees by causing Bema Block and Bema Group corporate checks to be issued to DJ Construction Group Inc. DJ Construction was a shell corporation created by others for use in the check cashing scheme. DJ Construction did no actual work for either Bema Block or Bema Group.

Marquez caused the checks to be cashed at a check cashing store that was aware of the arrangement. Marquez then caused his employees to be paid with the cash from the checks. In 2007, $698,848.82 in Bema Block and Bema Group checks were written to DJ Construction and cashed to pay employees. Marquez failed to report the cash wages on quarterly employment tax returns and failed to withhold and pay over employment taxes on the wages.
According to court documents, Marquez also caused certain Bema Block employees to be paid with two checks: one payroll check from which the employment taxes were withheld and an additional check with no taxes withheld. The additional check was issued not from Bema Block, but from one of two corporations, MFCM Group Corporation and MJMF Group Corporation, created by Marquez and others solely for this purpose. From 2004 through 2007, Marquez caused approximately $664,535 in checks from MFCM Group and at least $469,049 in checks from MJMF Group to be written to Bema Block employees. Marquez failed to report the wages paid by these checks on quarterly employment tax returns and failed to withhold and pay over employment taxes on the wages.

According to the information, Marquez willfully aided and assisted in the preparation and presentation to the IRS of a false Employer’s Quarterly Federal Tax Return (IRS Form 941) for the calendar quarter ending Dec. 31, 2010. The tax return falsely and fraudulently reported $130,021 in wages, tips and other compensation by Bema Group Corp. to its employees that quarter.

The court scheduled sentencing for Nov. 3, 2011. Marquez faces a maximum of three years in prison, a maximum of one year of supervised release and a fine of $250,000. As part of his plea agreement, Marquez agreed that the United States suffered an employment tax loss of at least $200,000 but not more than $400,000 and he agreed to pay restitution to the IRS in the amount of $280,362.”