A Lowell staffing-agency owner has admitted he hid more than $6 million in payroll and sidestepped required taxes, according to federal filings. Henry Lam, 68, pleaded guilty in Boston federal court after prosecutors said he ran HL Temporary Services and paid many workers in cash while understating payroll to insurers and tax authorities. Sentencing is scheduled for Aug. 27 in U.S. District Court.
According to a press release from the U.S. Attorney's Office, District of Massachusetts, Lam pleaded guilty to one count of failure to collect and pay over taxes and one count of mail fraud. Prosecutors say the scheme ran from 2016 through 2023 and involved cashing clients' checks at local check-cashing businesses and paying temporary workers primarily in cash, which concealed more than $6.1 million in payroll and avoided over $1.5 million in payroll taxes.
As reported by The Boston Globe, Lam's plea agreement calls for a recommended 15-month prison term, followed by two years of supervised release, about $1.6 million in restitution, a $1,600 special fee and forfeiture of assets. The recommendation still has to be accepted by a judge at sentencing on Aug. 27.
The Lowell Sun reports that court filings show Lam cashed more than $6.2 million in client checks and submitted false payroll journals and tax forms to two insurance companies between 2015 and 2022. The Sun's coverage notes the plea agreement specifies $1,652,573.31 in total restitution, with $1,564,459.31 earmarked for the IRS.
How Prosecutors Say The Scheme Worked
Investigators say Lam had client companies pay HL Temporary Services for their temporary workers, then took those client checks to local check-cashing businesses. From there, according to court documents, he paid employees largely in cash, keeping a big chunk of the real payroll off the books. That understated payroll was then used to obtain workers' compensation policies at lower premium rates, a tactic outlined by IRS Criminal Investigation.
What He Faces
The U.S. Attorney's Office notes that failure to collect or pay over taxes carries a maximum of five years in prison, while mail fraud carries up to 20 years; both offenses can also bring fines, restitution and supervised release. Although prosecutors are recommending a 15-month sentence under the plea agreement, the judge will decide the final sentence after reviewing the federal sentencing guidelines and any victim restitution claims.
A Familiar Pattern In Staffing Fraud
Federal authorities have seen similar setups before, with temporary-staffing operators hiding cash payroll to dodge taxes and trim insurance bills, triggering multi-agency investigations. The FBI's earlier reporting on a Stoughton staffing-agency case describes how such operations can generate large tax losses and heavy penalties for owners, and typically involve cooperation between federal tax investigators and state insurance regulators.
For now, Lam's sentencing remains set for Aug. 27, when a judge will decide whether to accept the plea agreement and the proposed penalties, including restitution and forfeiture. The Boston Globe has reported that the deal recommends the 15-month term, while The Lowell Sun details roughly $1.6 million in total restitution. The judge could ultimately impose a different sentence.
