12 Plead Guilty in South Carolina Check Cashing Scheme
Federal prosecutors in South Carolina announced that 12 people have pleaded guilty to tax fraud and immigration charges in a check-cashing scheme that was used to avoid payroll taxes and workers’ compensation premiums.
The plea agreements came after a “multi-year” investigation by the U.S. Attorney’s Office for South Carolina, the office said in a press release Tuesday. The defendants admitted to cashing at least $15 million in checks.
Prosecutors said the investigation found that similar schemes operating along the South Carolina coast has resulted in tens of millions of tax losses.
“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,” stated acting U.S. Attorney M. Rhett DeHart.
According to the press release, unlicensed contracts met with check cashers in parking lots outside of stores and coffee shops. They handed over business checks made out to a company that the check cashing company created. The check cashiers would hand over bags of cash that were used to pay employees, charging the contractors 3% of the amount of the check.
The check cashing companies also provided certificates of workers’ compensation insurance for the construction company that were not actually valid. The check cashers agreed to claim to be subcontractors that provided the construction company with workers, but the scheme was actually a way for the construction companies to hire unauthorized aliens who would accept untaxed cash payments.
The office said investigators “embedded themselves” in the Myrtle Beach area and recorded multiple interactions with the construction companies.
Contractors with Daniel Lavoie Construction Services, Duran Masonry, Extreme Siding, Master Homes Calabash, Metro Concrete Finishers, Master Homes Design Center and Paint by Numbers pleaded guilty. The 12 defendants have agreed to pay restitution in an amount just under $3 million, the U.S. Attorney’s Office said.
Chief U.S. District Judge R. Bryan Harwell accepted each of the guilty pleas and will sentence the defendants after he receives and reviews a sentencing report by the U.S. Probation Office. The defendants face a maximum penalty offive years in prison for conspiracy to defraud the United States and six months in prison and a fine of $250,000 plus $3,000 for each unauthorized alien hired, the U.S. Attorney’s Office said.