12 plead guilty in federal tax fraud investigation into Myrtle Beach construction companies
Twelve owners and operators of construction companies in Myrtle Beach and Conway pleaded guilty to federal tax fraud charges, accused of hiring immigrants who entered the country illegally, paying them under the table and lying about providing insurance for workers.
U.S. Attorney for the District of South Carolina M. Rhett DeHart’s office announced the convictions Tuesday morning at a press conference held at the Myrtle Beach Police Department Annex.
DeHart called the years-long undercover federal investigation the largest criminal IRS operation in the history of the Pee Dee region of South Carolina.
The construction companies used unlicensed check-cashers to make illicit cash payments to workers and avoid paying employment taxes. The check-cashers also provided certificates of insurance falsely stating that the employees were covered under workers’ compensation insurance.
Each of the 12 defendants — who owned or ran seven construction companies — pleaded guilty to one charge of conspiracy to defraud the United States, which is a felony, and one misdemeanor charge of unlawful employment of individuals who entered the country illegally.
“These 12 pleas are only the first convictions stemming from this operation,” Assistant U.S. Attorney Derek Shoemake said at the press conference, adding that the convictions are part of “much larger and active investigation” spanning the South Carolina coast.
“We will continue to pursue and prosecute those who try to get ahead on the backs of American taxpayers,” Shoemake said.
DeHart said in the press release at least $15 million in checks were cashed by the defendants. He estimated at least tens of millions of dollars of tax losses have occurred throughout the South Carolina coast because of similar schemes.
Each defendant faces a maximum penalty of five years in prison for the felony charge and six months for the misdemeanor.
The charges carry a fine of up to $250,000 and an additional $3,000 fine for each employee who entered the country illegally, Shoemake said.
As part of their plea deals, the defendants will pay back the money they owe to the IRS, amounting to a total of just under $3 million in restitution, Shoemake said.
“These workers, in a lot of ways, are as much a victim as the American taxpayer. They’re trying to do a job. They’re told they have insurance,” Shoemake said, estimating that “hundreds and hundreds” of workers are impacted by similar schemes along the South Carolina coast.
“Everything about this [scheme] incentivizes secrecy and avoidance.” Shoemake said, speaking on the dangers of working in the construction business without insurance.
“If a worker gets hurt, there’s no incentive at all to tell anyone,” he said. “Because so many of these people are undocumented, they’re not going to leave the hospital and report that to the police, which is what makes it such a nefarious crime.”
A check-casher who was indicted in the operation fled the country. The man is considered a fugitive by the federal government, Shoemake said.
The federal investigation into illegal check-cashing in the construction industry in the Myrtle Beach area began in late 2018, Shoemake said.
The companies used unlicensed check-cashers to avoid paying employment taxes on their workers.
DeHart said the schemes were carried out via meetings in parking lots between check-cashers and representatives from the construction companies. The construction company would give the check-casher a business check made out to a company the check-casher had created, and the check-casher would give the construction company representative a bag of untaxed cash that would be used to pay the employees in exchange for a fee.
The check-casher would also provide a false certificate of workers’ compensation insurance. The check-casher then would claim to be a subcontractor who provided the employees and provided insurance.
“By skirting tax obligations and hiring unauthorized workers, these businesses put profit over people and create for themselves an unfair advantage,” said Dan Elliott, assistant special agent in charge for IRS criminal investigations.
In 2019, undercover IRS agents in the Myrtle Beach area recorded interactions with the defendants’ companies, according to the press release. The investigation was led by the IRS and Homeland Security with assistance from the Myrtle Beach Police Department.
The defendants and their companies are as follows:
Daniel Lavoie Construction Services:
Daniel A. Lavoie, 49, of Conway
Enrique R. Reyes, 48, of Conway
Duran Masonry:
Walter A. Duran, 45, of Myrtle Beach
Lisa Caulley Sellers, 57, of Myrtle Beach
Extreme Siding:
Ming Xue Nan, 52, of Myrtle Beach
Katherine L. Welker, 39, of Myrtle Beach
Master Homes Calabash:
Marylany Hardman Levino, 36, of Myrtle Beach
Josafa P. Neto, 43, of Myrtle Beach
Metro Concrete Finishers:
Saul Prieto, 56, of Myrtle Beach
Martha E. Zarate, also known as Martha E. Prieto, 54, of Myrtle Beach
Master Homes Design Center:
Marcos Caetano De Almeida, 45, of Myrtle Beach
Paint By Numbers:
Johanna A. Carpio, 38, of Myrtle Beach
This story was originally published October 26, 2021 at 10:15 AM.
