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Published on January 21, 2025
Jacksonville Court Sentences Honduran National to 27 Months for $14 Million Fraud SchemeSource: Unsplash/ Ye Jinghan

In Jacksonville, Florida, a significant sentence has been handed down to a Honduran national involved in a multi-million dollar fraud scheme against the IRS and a workers’ compensation insurance company. According to the U.S. Attorney's Office for the Middle District of Florida, Jose Molina-Herrera, age 27, will serve 27 months in federal prison for his involvement in a conspiracy to commit wire fraud and to defraud the United States.

The court records reveal that between 2019 and 2020, Molina-Herrera, with the aid of co-conspirators, orchestrated a scheme utilizing a shell company, All National Remodeling LLC, to pay construction workers "off the books," this move not only skirted the issue of payroll taxes but also allowed for the avoidance of workers' compensation insurance premiums. Those contractors and subcontractors participating in the scheme were provided with fraudulent certificates of liability insurance in exchange for a cut of their payroll, leaving the insurance company on the hook for over $2.2 million, as per the U.S. Attorney's Office.

Further exacerbating the situation, checks were cashed through the company’s bank account to pay workers in hard cash the entire process sidestepped the legal obligation of withholding and remitting payroll taxes with more than $14 million paid out to workers and over $3.5 million lost in tax receipts. In his role, Molina-Herrera must also forfeit $867,005 and pay $3,558,579.42 in restitution to the IRS.

Separately, a core participant in the operation, Oscar Molina-Avila has already been sentenced to 52 months' imprisonment for his complicity in the corporate charade, "Using shell companies to pay workers under the table is not only illegal, it gives an unfair competitive advantage that businesses who do things the right way can’t match," Ron Loecker, Special Agent in Charge of IRS-Criminal Investigation's Tampa Field Office said about the case. According to the Justice Department's announcement, the concerted efforts of the Internal Revenue Service—Criminal Investigation, Homeland Security Investigations, and the Florida Department of Financial Services – Bureau of Insurance Fraud, led to the exposure and prosecution of this fraudulent activity.