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PORTLAND, Ore.—A Beaverton, Oregon man pleaded guilty today for his role in a scheme to use construction subcontracting companies to evade $100 million in payroll and income taxes on wages paid to unlicensed construction workers.
Francisco Mendez, 27, pleaded guilty to conspiracy to commit tax evasion.
According to court documents, between January 2014 and February 2018, Mendez conspired with others to make “under the table” cash payments to unlicensed construction work crews for the purpose of evading payroll and income taxes due on these wages.
As part of the scheme, otherwise legitimate construction companies would bid on residential real estate projects knowing they did not have enough employee-workers to perform all the work required. These companies would supplement their own workforce with independent work crews, some of whom did not possess valid Construction Contractors Board (CCB) licenses. Leaders of unlicensed crews would pay a fee to use another company’s CCB license.
Mendez registered a company, obtained a CCB license in his own name, and began accepting payments from unlicensed work crews for the use of his license. The legitimate construction companies did not put these unlicensed work crews on their regular payroll and, instead, wrote checks payable to Mendez’s company. Mendez cashed these payroll checks at check cashing businesses and made “under the table” cash wage payments to the unlicensed work crews. He further began accepting and cashing payroll checks from construction companies on behalf of other CCB license holding companies.
On May 20, 2021, Mendez was charged by criminal information with one count of conspiracy to commit tax evasion.
Mendez faces a maximum sentence of five years in prison, a $250,000 fine, and three years of supervised release. He will be sentenced on September 13, 2021 before U.S. District Court Judge Karin J. Immergut.
As part of the plea agreement, Mendez has agreed to pay restitution in full to the IRS as identified by the government prior to sentencing and ordered by the court.
Acting U.S. Attorney Scott Erik Asphaug of the District of Oregon made the announcement.
This case was investigated by IRS Criminal Investigation. Assistant U.S. Attorneys Seth D. Uram and Gavin W. Bruce are prosecuting the case.
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