DOJ Announces Convictions for Major Undercover Operation in South Carolina
The Department of Justice recently announced convictions in a major undercover operation involving seven construction-related companies in the Pee Dee region of South Carolina. After a years-long investigation into the construction industry in the region, 12 defendants have been sentenced for immigration and employment-related crimes. The announcement underscores the significant criminal repercussions for manipulating undocumented individuals for personal gain.
Illegal Check-Cashing Scheme
The convictions stem from unscrupulous business practices in the construction industry in the South Carolina coastal region spanning several years. Specifically, in late 2018, the Internal Revenue Service (“IRS”) and Homeland Security Investigations (“HSI”) started investigating an illegal check-cashing scheme. The scheme used unlicensed check cashers to facilitate under-the-table cash payments to employees, many of whom were undocumented noncitizens.
The announcement stated certain construction companies hired unlicensed check cashers to cash employment checks for undocumented individuals to avoid certain employment taxes. A member of the construction company would give the check casher a business check made out to a company the check casher had created; in return, the check casher would give the construction company representative a bag of cash to be used to pay the employees. For their services, the check casher withheld a fee of approximately three percent.
Additionally, the check cashers provided certificates of insurance that falsely reported the noncitizens were covered under workers’ compensation insurance, which was not the case. The check casher would claim to be a subcontractor who provided insurance, but in fact simply concealed the true nature of the scheme.
The under-the-table payments, which totaled at least $15 million, defrauded the U.S. government and resulted in at least tens of millions of dollars in lost tax revenue.
U.S. Attorney Announces Criminal Convictions
In late May, Chief United States District Judge R. Bryan Harwell sentenced each of the 12 defendants to five years’ probation, with all but one sentenced to home confinement. The court additionally ordered each defendant to pay restitution for the tax losses they cost the government. The court imposed the probation sentences largely because the defendants admitted guilt early, agreed to assist authorities, paid collectively nearly a million dollars toward the approximately $3 million dollars owed to the IRS in restitution, and agreed as a condition of probation to make monthly payments – in most cases substantial – until the IRS is made whole.
Each of the 12 defendants previously pleaded guilty to an Information charging them with one felony count of conspiracy to defraud the United States and one misdemeanor count of unlawful employment of aliens.
According to U.S. Attorney Corey F. Ellis, the “defendants stole money from South Carolina taxpayers, they stole opportunities from those in the construction industry who did the right thing, and they stole safety from the workers who labored on jobsites without insurance.” He concluded that “this case should be a message to businesses and individuals who try to get ahead by breaking the law: it is not worth it because we are watching you and we will prosecute you.”