Mendez and Zambrano, Tax Evasion, Rhode Island 2023

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

PROVIDENCE – In a stunning revelation, two Woonsocket businessmen who operated a drywall subcontracting business have been named in a twenty-eight count federal indictment for their alleged involvement in a multi-million dollar scheme to avoid federal employment taxes.

The indictment, unsealed on Monday, alleges that Jesus Jose Mendez, 43, and Jamie Zambrano, 35, operators of J&J Drywall, Inc., which later became known as Empire, Inc., 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.

According to the indictment, Mendez and Zambrano 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.

The indictment further alleges 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.

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.

An arrest warrant has been issued for Zambrano.

A federal indictment is merely an accusation. A defendant 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.

United States Attorney Aaron L. Weisman thanks Homeland Security Investigations and the Rhode Island State Police for their assistance in the investigation of this matter.