A Florida man, Alexis Garcia, has admitted in court that he played a big role in a secret payroll scheme that cost the United States more than $4 million. Garcia entered his guilty plea before Magistrate Judge Kyle C. Dudek in the Middle District of Florida. The scheme ran between 2017 and 2019 and was connected to a construction company based in Naples, Florida.
Court papers showed that Garcia managed and directed the operations of the company, Tape Drywall Services Inc., which was used to hide payroll activities from the government. Instead of paying workers the normal way, with taxes and insurance included, Garcia and his co-conspirator created an off-the-books system. This meant workers were paid in cash and the payments were never reported to the Internal Revenue Service (IRS).
The company received checks from contractors who hired them to provide workers for construction jobs. Instead of putting those checks into the business accounts, Garcia and his partner would cash them. They then took a fee for themselves and handed the rest of the money to job foremen. Those foremen paid workers in cash.
In total, more than 3,600 checks worth nearly $28 million were cashed this way. By doing this, the wages went unreported, and the taxes that should have been collected and sent to the government were never paid.
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Millions in Taxes Never Paid
The IRS requires employers to take out Social Security, Medicare, and federal income taxes from workers’ wages. These funds are essential because they help pay for programs millions of Americans depend on, like Social Security and Medicare. Employers also must report payroll accurately and pay employment taxes on time.
In this case, Garcia and his co-conspirator failed to do any of these things. They avoided paying the taxes that were owed, which created a massive loss for the U.S. government. Officials estimate that the total loss from this scheme was more than $4.2 million.
The money stolen through this type of fraud is not just a number on paper. It represents funds that should have gone toward helping older Americans, people on disability, and the health care system that millions rely on. The court also noted that withholding taxes makes up a very large part of the government’s yearly income. That is why skipping these payments causes serious damage.
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Insurance Companies Also Misled
The payroll fraud did not stop at unpaid taxes. Workers’ compensation insurance companies were also tricked. Businesses are required to pay into workers’ compensation funds based on the size of their payroll. These funds are meant to cover medical bills and lost wages if a worker gets hurt on the job.
But in this case, Garcia and his co-conspirator reported far less payroll than they really had. By hiding the real size of their payroll, they paid much smaller insurance premiums than they should have. This left insurance companies underpaid and employees at risk.
The scheme was eventually discovered after investigators from IRS Criminal Investigation, with support from Homeland Security Investigations, dug into the company’s practices. After gathering the evidence, charges were filed. The Florida man admitted guilt in court, and sentencing will take place at a later date.
Garcia now faces up to five years in prison. Along with prison time, he could also be ordered to pay back the money lost, face supervised release, and receive additional fines. The case is being prosecuted by Senior Litigation Counsel Michael C. Boteler of the Justice Department’s Tax Division and Assistant U.S. Attorney Yolande G. Viacava for the Middle District of Florida. A federal district court judge will decide the final sentence.