The owner of several construction companies was sentenced to four years and four months in federal prison for a workers’ compensation and tax fraud scheme.
Oscar Molina-Avila, the owner of five Florida-based construction companies, was also ordered to pay more than $5.4 million in restitution to a workers’ compensation insurance company and the IRS.
Molina-Avila was also ordered to forfeit $2,111,151, which was acquired in a wire fraud conspiracy that was part of the scheme.
Molina-Avila pleaded guilty on Feb. 3, 2021, to charges of conspiracy to commit wire fraud and conspiracy to defraud the United States for the purpose of impeding the lawful functions of the Internal Revenue Service.
Multiple shell companies used
Between 2016 and 2020, Molina-Avila conspired with others to “facilitate the payment of construction workers ‘off the books’ in order to avoid paying premiums for workers’ compensation insurance and payroll taxes,” according to the Department of Justice.
Molina-Avila and his co-conspirators used shell companies in a scheme in which other construction contractors and subcontractors could get certificates of liability insurance in the names of the shell companies.
The shell companies used in the scheme included All National Remodeling, El Boqueron Construction, La Fuente Construction, Goyos Construction Services, and Universal Florida Construction.
Shell company proof of insurance used but no premiums paid
The contractors and subcontractors would then use these certificates as proof that they were insured. However, the shell companies’ insurance policies were based on fraudulent applications that didn’t disclose that contractors and subcontractors would be employing workers who were ostensibly insured under the shell companies’ barebones insurance policies.
Because the contractors and subcontractors were using the shell companies’ proof of insurance but never paying any insurance premiums, insurance companies were defrauded out of more than $10 million.
A similar scheme for tax evasion was also used, causing the U.S. Treasury to lose more than $12 million in tax receipts.