An illegal financial enterprise that exploited workers' compensation and tax systems has led to a Honduran national being sentenced to federal prison. Ana Juanita Andrade-Reyes, who was present in the United States unlawfully, will serve 37 months behind bars for her involvement in a multi-million dollar wire and tax fraud scheme. Honorable United States District Judge Wendy W. Berger additionally mandated Andrade-Reyes to pay $2,084,182 in restitution to the IRS and imposed a money judgment of $664,588 against her, as the U.S. Attorney's Office for the Middle District of Florida explains.
Andrade-Reyes' elaborate scam involved setting up a shell company under the guise of being part of the construction industry to sidestep financial liabilities. By issuing falsified workers’ compensation insurance to numerous work crews, her actions tricked both contractors and the insurance company. This shell company, which only had a few so-called employees, was used to provide fake proof of insurance—essential in the state of Florida for subcontracting work crews. Documented by the court, these workers, many of whom were undocumented illegal immigrants, were employed illicitly in various Florida counties, while Andrade-Reyes cashed payroll checks worth some $8 million without making necessary tax withholdings.
The intricacies of the fraud had far-reaching impacts. Andrade-Reyes charged a typical fee of 6% of the payroll to cash out the workers' wages, bypassing tax deductions and fostering a submarket of cheap labor. Both the shell company and contractors failed to declare these wages, leading to an untaxed sum of over $2 million—numbers provided by the IRS’s investigation. Homeland Security Assistant Special Agent in Charge Timothy Hemker underscored the link between this type of fraud and border security, saying, "Worker’s compensation insurance fraud schemes are a built on unlawful hiring practices of illegal aliens and are directly tied to our border security.” These schemes, Hemker noted, drive down wages, compromise safety, and disadvantage law-abiding contractors, as per the U.S. Attorney's Office.
Special Agent in Charge of the IRS-Criminal Investigation’s Tampa Field Office, Ron Loecker, underscored the significance of fairness in the market, stating, “A level playing field is essential for an industry to thrive in our society.” He warned against underhanded methods to gain a competitive edge, as "no matter how sneaky you think you are, we will find out, we will investigate, and we will do everything we can to balance the free market by bringing you to justice," according to the U.S. Attorney’s Office's statement.
The combined efforts of Homeland Security Investigations, IRS-Criminal Investigation, and the Florida Department of Financial Services brought Andrade-Reyes's operation to a close. The case was prosecuted by Assistant United States Attorney John Cannizzaro. This sentencing sends a clear message to those involved in similar fraudulent activities—justice will pursue and, where appropriate, prevail.
