An illegal immigrant from Honduras has been sentenced to eight years in prison for his role in a payroll tax fraud scheme that defrauded the U.S. government of nearly $40 million. The scheme, which operated between 2015 and 2022, involved the creation of shell companies in Orlando, Florida, that provided unlicensed cash courier and check-cashing services.
Mario Flores, the Honduran national, conspired with his girlfriend, Iris Villafranca, and others to establish these shell companies. These entities facilitated payroll services for construction contractors and subcontractors, allowing them to pay employees in cash without withholding or remitting required payroll taxes to the IRS. This practice also enabled the hiring of undocumented workers, circumventing immigration laws.
Prosecutors stated that the shell companies cashed approximately $89 million in checks for clients. Flores admitted to being responsible for at least $9.4 million in tax losses to the IRS. He pleaded guilty in March to one count of conspiring to defraud the U.S. and one count of conspiring to operate an unlicensed money transmitting business.
During the investigation, Flores reportedly attempted to deceive authorities by providing fabricated receipt books to support false tax returns filed by the shell companies. He also made false statements to IRS special agents in an effort to conceal his involvement and that of his co-conspirators. Evidence indicated that Villafranca communicated with Flores before he met with investigators, and he subsequently provided misleading information.
In April, Iris Villafranca received a 17-year prison sentence and was ordered to pay over $38 million in restitution for her involvement in the scheme. Two other co-conspirators, Osman Zapata and Francisco Alvarez, were sentenced to four years in prison and four years of probation, respectively. Zapata was also ordered to pay $2.5 million in restitution, while Alvarez was ordered to pay $2.4 million.
Assistant Attorney General Colin McDonald of the Justice Department’s National Fraud Enforcement Division commented that the case highlights how unchecked illegal immigration can fuel widespread payroll tax fraud and underground economies. He emphasized that the sentence serves as a strong message to those who exploit borders, evade taxes, and violate federal laws.