Iris Villafranca, Off-the-Books Payroll Scheme, California 2026

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In a shocking case of tax evasion and exploitation, two Honduran nationals have been sentenced to prison for their roles in a years-long off-the-books payroll scheme that caused a staggering loss of over $38 million to the United States.

Iris Villafranca and Osman Donaldo Zapata, both Honduran nationals, were handed down prison sentences of 204 months and 51 months, respectively, for their involvement in the scheme. According to court documents, the duo conspired with others to create a series of shell companies that operated as an unlicensed check cashing and cash courier service business.

Between 2015 and 2022, the shell companies cashed approximately $89 million in checks from subcontractors in the construction industry, charging them a percentage of the dollar amount as a fee for the service. However, the scheme allowed construction contractors and subcontractors to pay their workers in cash without withholding and paying required payroll taxes, effectively allowing them to operate without regard to the workers’ legal authority to work in the United States.

The defendants also caused the filing of false tax documents with the IRS, further exacerbating the scheme’s scope and impact. The case highlights the brazen nature of tax evasion and exploitation, with the defendants reaping millions in profits while causing significant financial losses to the US government.

The sentencing marks a significant victory for law enforcement, who have been working tirelessly to bring those responsible for such schemes to justice. As the investigation continues, it remains to be seen how many others may be implicated in this complex web of deceit and corruption.

Source: Department of Justice

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