Florida woman sentenced to federal prison in construction fraud case

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Dive Brief: 

• A Florida woman who ran two fraudulent Tampa-area construction labor firms was sentenced to 12 months and one day in federal prison for conspiracy to defraud the United States and the Internal Revenue Service.
• U.S. District Judge Virginia M. Hernandez Covington also ordered Gabriela Inamagua, 29, to pay nearly $9 million in restitution to two victim insurance companies and to the IRS. Inamagua had pleaded guilty to the charges in October, according to a Jan. 2 release from the U.S. Attorney’s Office. 
• Inamagua’s father and her father’s former girlfriend were convicted of similar crimes in 2022, according to the Claims Journal. The cases involve wider issues that federal agencies have highlighted recently regarding an increase in state and federal payroll tax evasion and workers’ compensation fraud by U.S. construction businesses. 

Dive Insight:

Inamagua owned and managed two fraudulent construction companies which purported to supply construction services and labor for construction contractors and subcontractors, according to court documents. Florida law required the companies, Uno Construction and Perfect Builders Group, to secure and maintain adequate worker’s compensation insurance coverage.

These “shell” companies had agreements with contractors and subcontractors to use workers — many who were unauthorized to work in the U.S. — alleged to be Inamagua’s employees at construction sites, though they were actually working for and under the daily supervision and direction of the contractors, according to the release. Inamagua and her companies then regularly received payroll checks from contractors that they cashed at various financial institutions to pay Inamagua’s so-called employees and other related expenses.

Court documents allege that Inamagua fraudulently represented in insurance applications that her companies had a very limited payroll and a very limited number of employees who worked on construction jobsites, the release said. Inamagau also caused the transmission of false and fraudulent wire communications to numerous contractors claiming that her companies’ employees had full worker’s compensation coverage.

In reality, Inamagua’s companies received and cashed more than $34 million in checks from various construction contractors for these purported employees, according to court documents. These payroll figures far exceeded the very limited payroll figures that Inamagua had reported to her worker’s compensation insurance companies. 

As a result, these employees — who were, in reality, the employees of other entities — performed work on jobsites without adequate insurance coverage, court documents allege. In addition, the insurance companies that dealt with Inamagua’s companies lost premiums they would have charged had they known the true number of workers involved.

‘Ghost’ employees

The IRS’s Criminal Investigation unit and Florida’s Department of Financial Services investigated the case, with assistance from Homeland Security Investigations. It is part of a lengthy investigation by those agencies into the use of shell companies and “ghost” employees in the construction industry.

Other federal agencies are also cracking down on financial fraud in the construction industry. The Financial Crimes Enforcement Network, part of the U.S. Treasury Department, issued a notice to financial institutions last year highlighting an increase in state and federal payroll tax evasion and workers’ compensation fraud by U.S. construction businesses. 

State and federal tax authorities lose hundreds of millions annually to these types of schemes, FinCen said, and the schemes negatively affect legitimate contractors and their workers by putting them at a competitive disadvantage.

As a result of her misrepresentations, Inamagua’s companies also disclaimed responsibility for ensuring that jobsite workers were legally authorized to work in the U.S. and evaded laws that required the payment of state and federal payroll taxes on behalf of these workers, the release said. In addition, Inamagua’s companies did not collect or remit all required payroll taxes.

The contractors who actually paid these workers’ wages and used their services also avoided responsibility for those taxes. The amount of those unpaid payroll taxes totaled more than $8.9 million.

“The construction industry as a whole suffers when fraudsters exploit the system by creating fictitious shell companies to illegally pay workers off the books in order to scam insurance companies and avoid employment taxes,” said IRS-CI acting Special Agent in Charge Tara K. Reed in the release.