Orlando Residents Confront 146 Million Payroll Fraud Sentence

Overview of the Payroll Fraud Scheme

Three residents from Orlando have been sentenced for their involvement in a $146 million construction payroll fraud scheme. The individuals, Eduardo Anibal Escobar, Carlos Alberto Rodriguez, and Adelmy Tejada, were found guilty of conspiracy to commit wire fraud and tax fraud. Their actions led to significant financial losses for the Internal Revenue Service (IRS) and workers' compensation insurers.

Sentencing Details

Senior U.S. District Judge Timothy J. Corrigan handed down the sentences. Escobar received a prison term of 4 years and 9 months, while Rodriguez was sentenced to 3 years and 4 months. Tejada received 18 months in prison along with 6 months of home detention. All three pleaded guilty on April 3.

Financial Impact of the Scheme

According to a release from the U.S. Attorney for the Middle District of Florida, the court ordered the defendants to pay $36,957,616 in restitution to the IRS for unpaid payroll taxes and an additional $397,895 to two insurance companies for workers' compensation claims they covered.

How the Scheme Operated

From approximately January 2015 to August 2024, the defendants conspired to facilitate the payment of construction workers "off the books." This allowed them to avoid paying payroll taxes and workers' compensation insurance premiums. The scheme also involved the employment of undocumented workers who were not legally authorized to work in the United States.

Company Involvement and Subcontractor Agreements

The defendants operated through their companies, T. Escobar Construction and C. Escobar Construction. They entered into agreements with hundreds of construction subcontractors, enabling these subcontractors to obtain contracts with and perform work for construction contractors.

In exchange for a fee of six to eight percent of the subcontractor's payroll, the defendants provided certificates of insurance in their companies' names to construction contractors. These documents falsely claimed that the subcontractors worked for the defendants' companies and were covered by their workers' compensation insurance.

Insurance Policy Misrepresentation

The companies’ insurance policies were based on applications that misrepresented the number of employees and payroll. As a result, the insurers unknowingly covered hundreds of workers. A total of $146,077,535 in payroll checks were deposited into the defendants' bank accounts. From these funds, the defendants withdrew cash to pay the subcontractors' workers, after deducting their fee—without withholding or paying over payroll taxes to the IRS.

Consequences of the Fraud

This fraudulent activity led to the U.S. Treasury losing $36,957,616 in unpaid payroll taxes. Additionally, the scheme allowed construction contractors and subcontractors to avoid responsibilities such as paying federal taxes, ensuring adequate workers' compensation insurance, and verifying that workers were legally authorized to work in the United States.

Statements from Law Enforcement Officials

Special Agent in Charge Ron Loecker from the IRS-Criminal Investigation Tampa Field Office emphasized the importance of collaboration between federal and state agencies in investigating and prosecuting illegal financial schemes. He highlighted the efforts of the IRS Criminal Investigation, Homeland Security Investigations, and the Florida Department of Financial Services in bringing down a criminal enterprise that defrauded workers' compensation insurers and evaded tax obligations.

Tim Hemker, Assistant Special Agent in Charge from Homeland Security Investigations Jacksonville, noted that the criminals defrauded the government by dodging payroll taxes and exploited vulnerable workers by not carrying proper insurance. He also pointed out that such tactics harm law-abiding contractors and ultimately affect consumers.

Ongoing Investigations and Prosecution

This case was investigated by the Internal Revenue Service – Criminal Investigation, Homeland Security Investigations, and the Florida Department of Financial Services. It is part of a broader investigation into the use of shell companies and "ghost" employees in the construction industry. The prosecution was handled by Assistant United States Attorney Arnold B. Corsmeier, while asset forfeiture was managed by Assistant United States Attorney Jennifer M. Harrington.