A Sustainable Workforce Starts With You

Florida Contractors Accused of Racketeering and Fraud in Scheme Using “Shell Companies”

Six men have been arrested and charged with racketeering and fraud charges after allegedly paying employees of a Florida construction company through shell companies in an attempt to avoid paying more than $12 million in workers’ compensation premiums and more than $3 million in federal payroll taxes.  Meanwhile, the men appear to have made over $17 million in profits over the period of the investigation, which lasted from October 2013 to August 2015.

The Sun Sentinel, a publication based in Fort Lauderdale, reports that a Broward County Sheriff’s Office affidavit said that the owners of Richard and Rice Construction LLC and four other men used over 20 shell companies to hide the number of employees they hired.  The article says that police detective Benjamin Dusenbery wrote in the affidavit that:

“Although laborers were under Richard and Rice Construction control, they were said to be employed by the shell companies.  This allowed Richard and Rice Construction to hide the number of employees it had, lowering its insurance premiums and payroll taxes, while appearing to comply with necessary coverage requirements.  It allowed the company to submit lower bids for work.”

The article talks about the pay that trickled down to the actual workers – many of whom were paid off the books:

‘These workers are often only left with 75 percent to 80 percent of their already meager wages once each shell company owner or other facilitator has taken their cut,’ Dusenbery wrote.”

The article lists the names of the men from the arrest report:

“Arrested were Richard and Rice owners Gaetan Richard, 63, and Murray Rice, 49, along with David Hinchberger, 46, Ricardo Lopez, 49, Christos Rokanas, 42 and Pablo Ermito Martinez, 50.”

This is just another example of one of the many ways employee misclassification and payroll fraud are too often perpetuated in the construction and other industries.  Those who are fighting this cancer will continue to raise awareness of the problem until the federal government, industry leaders, and the general public can no longer turn a blind eye towards it.