- Two Broward County, FL, men admitted to setting up a fake construction company through which they cashed $7.4 million in undocumented construction worker payroll, the South Florida Sun-Sentinel reported.
- Yamil Sanjurjo Cordero and Sandro Mendoza Alvarado said that their company, Sunrise All Contractor Corp., did not actually perform any work but used the company as a shell to receive payment and cash checks, for a fee, on behalf of other companies that would then pay their undocumented workers.
- The Florida Division of Insurance Fraud said that not only did Cordero and Alvarado profit from the deal, but they also helped the companies they serviced avoid paying workers' compensation premiums and payroll taxes.
Cordero and Alvarado are being held in federal custody pending sentencing, and the two face up to five years in prison and fines of up to $250,000. Cordero was already serving a sentence for fraud, money laundering and workers' compensation fraud at the time of his arrest.
Schemes similar to this case are often devised so that companies can avoid the expenses of workers' compensation premiums and payroll taxes. In fact, cases where the workers are undocumented provide the most profit potential, as those employees are not likely to blow the whistle on such activity for fear of exposing their own undocumented status.
And payroll costs are high, often tempting construction company owners to try to sidestep the law to save money. Federal payroll taxes are 7.65% of total payroll, and workers' compensation premiums, depending on the trade and state of operation, can cost a construction company a sizeable amount of money. Earlier this year, a California contractor was arrested for allegedly underreporting his payroll by more than $755,000 to avoid paying workers' comp premiums, as well as other taxes and employee benefits.