An illegal immigrant from Honduras has been sentenced to eight years in federal prison for orchestrating an $89 million payroll fraud scheme that enabled the illegal employment of unauthorized construction workers while evading taxes.
The Justice Department announced Mario Flores pleaded guilty to conspiracy to defraud the U.S. government and conspiracy to operate an unlicensed money transmitting business.
Federal officials said Flores and his co-conspirators operated a network of shell companies between 2015 and 2022 to run an unlicensed check-cashing and cash courier business.
“This case exposes how unchecked illegal immigration fuels widespread payroll tax fraud and underground economies that harm American workers and taxpayers.”
According to court documents, the shell companies cashed approximately $89 million in checks from construction subcontractors, charging a fee based on the value of each transaction.
Prosecutors said the arrangement allowed contractors and subcontractors to pay workers in cash without withholding or paying required payroll taxes — enabling them to employ workers without regard to their legal authorization to work in the United States.
Authorities also alleged Flores caused false tax documents to be filed with the IRS to conceal the operation.
The Justice Department said the scheme resulted in more than $38 million in losses to American taxpayers.
“Today, we held an illegal alien from Honduras accountable for a brazen scheme that stole more than $38 million from American taxpayers to facilitate the employment of illegal aliens,” Assistant Attorney General Colin McDonald said.
McDonald added the sentence “sends a strong message: Those who exploit our open borders, cheat the U.S. Treasury, and violate federal laws will face justice.”
Federal officials also alleged that Flores and his associates defrauded workers’ compensation insurance companies by leasing insurance certificates to contractors and providing false information about the number of covered workers and their wages.
John Condon of Homeland Security Investigations said the agency remains committed to pursuing large-scale employment and tax fraud schemes.
“Homeland Security Investigations is committed to protecting the integrity of our financial system and enforcing our nation’s laws,” Condon said. “Those who orchestrate large-scale payroll tax fraud and facilitate the illegal employment of unauthorized workers will be held accountable.”
According to the Justice Department, Flores’s co-conspirators — Iris Villafranca, Osman Zapata and Francisco Alvarez — were previously sentenced to prison terms ranging from four to 17 years.
