Jesus Jose Mendez, Tax Evasion, Rhode Island 2022

PROVIDENCE, R.I. – In a shocking revelation, Jesus Jose Mendez, co-owner of Woonsocket-based J&J Drywall, Inc., has admitted to participating in a scheme to defraud the Internal Revenue Service of over two million dollars in taxes. This news comes as a blow to the community, highlighting a brazen attempt to evade the law.

According to court documents, Mendez and his business partner, Jamie Zambrano, paid most employees in cash, failing to properly account for, withhold, and pay federal and state employment taxes. This lack of transparency led to a significant loss for the government, with the IRS calculating the total federal tax loss at $2,821,463. The Massachusetts Department of Labor also suffered a loss of unemployment contributions to the Commonwealth of Massachusetts at $62,730.

The scheme, which allegedly took place from 2013 to 2017, involved using check-cashing businesses to cash more than 600 business receipt checks totaling over $16 million dollars. Mendez and Zambrano would then travel to construction sites carrying backpacks full of cash, which they left at the construction sites to be used to pay their employees. The majority of the remaining millions were allegedly used to fund a cash payroll for under-the-table laborers.

As part of the scheme, Mendez and Zambrano made just over $4 million in deposits in the business’s bank accounts, frequently structuring the amounts in less than $10,000. This was done to avoid raising suspicions and to evade reporting requirements.

Jesus Jose Mendez, now facing the consequences of his actions, will be sentenced by U.S. District Court Chief Judge John J. McConnell, Jr., on July 14, 2022. The defendant’s sentence will be determined by a federal district judge after consideration of the U.S. Sentencing Guidelines and other statutory factors.

Zambrano, the business partner, is currently a fugitive facing an indictment charging him with conspiracy to defraud the United States (IRS), 17 counts of failure to collect and pay over taxes, tax evasion, and eight counts of structuring financial transactions to evade reporting requirements. It is essential to note that a federal indictment is merely an accusation, and Zambrano is presumed innocent unless and until proven guilty.

The case is being prosecuted by Assistant U.S. Attorney John P. McAdams. The matter was investigated by Internal Revenue Service Criminal Investigation and U.S. Department of Labor Office of Inspector General, with substantial assistance from the U.S. Department of Labor – Office of Labor-Management Standards in Boston and the Rhode Island State Police.

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