A Woonsocket businessman described in court documents as a “vital cog” in a tax fraud conspiracy that defrauded the United States out of millions of dollars was sentenced to three years probation today, with the first fifty-two weekends to be served in detention at the Donald W. Wyatt Detention Facility, according to United States Attorney Zachary A. Cunha.
Jesus Jose Mendez, 44, co-owner of J&J Drywall, Inc., a subcontracting company incorporated in Massachusetts and operating in Rhode Island, and his fugitive business partner paid the majority of their employees, primarily undocumented workers, in cash “under the table” to circumvent tax laws and unemployment programs.
Mendez and his business partner, Jamie Zambrano, 37, of Woonsocket, are said to have used check-cashing organizations to cash more than 600 business receipt checks totalling more than $16 million between 2013 and 2017.
While under surveillance by law authorities, Mendez and Zambrano allegedly cashed checks at a Rhode Island check-cashing location and then travelled to construction sites carrying backpacks full of cash, which they left at the sites to pay their employees.
During the same period, Mendez and Zambrano deposited well over $4 million into the company’s bank accounts, often in quantities of less than $10,000.
Allegedly, the majority of the remaining millions were utilized to pay cash wages to undocumented workers.
Except for a tiny number of employees placed on an official payroll and paid by check, it is alleged that no income or employment taxes were withheld or paid to the IRS, nor were unemployment contributions made.
The Internal Revenue Service estimated a total federal tax loss of $2,821,463, while the Massachusetts Department of Labor estimated a loss in unemployment contributions to the Commonwealth of Massachusetts of $62,727.
At sentencing, Chief Judge John J. McConnell, Jr. of the U.S. District Court ordered Mendez to pay the Internal Revenue Service and the Massachusetts Department of Labor the full amount owed.
Zambrano is now on the run after being charged with conspiracy to cheat the Internal Revenue Service (IRS), 17 charges of failure to collect and pay over taxes, tax evasion, and eight counts of structuring financial transactions to escape reporting requirements.
A federal indictment is simply a charge. A defendant is deemed innocent until proven otherwise.
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Assistant United States Attorney John P. McAdams is prosecuting these charges.
Internal Revenue Service Criminal Investigation and U.S. Department of Labor Office of Inspector General conducted the investigation, with significant support from the U.S. Department of Labor – Office of Labor-Management Standards in Boston and Rhode Island State Police.
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