Two Woonsocket Businessmen Indicted in Multi-Million Dollar Scheme to Avoid Federal Employment Taxes

Two Woonsocket Businessmen Indicted in Multi-Million Dollar Scheme to Avoid Federal Employment Taxes

Two Woonsocket businessman who operated a drywall subcontracting business that performed jobs for large construction companies and projects, and that utilized several business addresses in Rhode Island and Massachusetts, have been named in a twenty-eight count federal indictment. 

The indictment alleges that the two individuals executed schemes to avoid paying federal employment taxes by paying employees in cash, often times delivered to worksites in backpacks, and failing to submit the actual amount of employment tax payments due the IRS.

About Indictment

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It is alleged in the indictment that for four years beginning in 2013, Jesus Jose Mendez, 43 and Jamie Zambrano, 35, operators of J&J Drywall, Inc., which later became known as Empire, Inc., used check cashing businesses to cash more than 600 business receipts totaling more than $16 million. During that time period, the defendants made more than $4 million in deposits into the business’ bank accounts.

It is alleged in the indictment that Mendez and Zambrano conspired to pay a substantial number of their employees, many of whom were illegal aliens, in cash. Payroll funds were delivered to worksites in backpacks. A small number of employees were paid by Mendez and Zambrano via official payroll, to include withholdings.

Zambrano and Mendez allegedly conducted more than 120 cash deposits of between $9,000 and $10,000, often times on consecutive days. Many of the deposits were in the exact amount of $9,900. It is alleged that deposits were frequently structured in amounts of less than $10,000 to avoid federal reporting requirements by financial institutions.

It also alleged that Zambrano and Mendez filed forms with the IRS and the Massachusetts Department of Unemployment Assistance reporting wages paid between 2013 and 2017 totaling $4.3 million, when in fact the company received approximately $20.1 million in gross receipts.

Federal Court Arraignment and Arrest Warrant

Mendez was arraigned in federal court in Providence on Monday and released on unsecured bond, charged by way of an indictment which charges him and Zambrano with conspiracy to defraud the United States, 17 counts of failure to collect and pay employment taxes, tax evasion, eight counts of structuring financial transactions to avoid reporting requirements, and wire fraud, announced United States Attorney Aaron Weisman/  

An arrest warrant has been issued for Zambrano.