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Miami Contractor Pleads Guilty to Tax Evasion
MIAMI – Axel Rafael Mercado, owner of Mercado Enterprises Inc., pleaded guilty to tax evasion before U.S. District Court Judge Patricia A. Seitz in the Southern District of Florida, according to the Internal Revenue Service (IRS) and the U.S. Attorney’s Office. The court has set sentencing for January 13, 2011.
According to court documents, from 2005 through 2007, Mercado attempted to evade a large part of his company’s federal employment taxes. To avoid his employment tax obligations, Mercado would have checks written to shell companies that were supposedly legitimate subcontractors hired to do work for Mercado Enterprises, but which in fact did no work. Mercado would then have those checks cashed at a local check-cashing store that was aware of the scheme and would use the cash to pay his workers.
Additionally, Mercado had checks written to a legitimate construction company, but that company also performed no work. Mercado did not report, withhold or pay the employment taxes on any of these cash wages. Mercado also caused his company to fail to file employment tax returns.
Mercado pleaded guilty to a one-count information charging him with tax evasion. All told, Mercado’s actions resulted in a tax loss of at least $352,605. Mercado faces a maximum of five years in prison and has agreed to pay restitution to the IRS of $352,605.
U.S. Attorney Wifredo A. Ferrer and Acting Assistant Attorney General John A. DiCicco commended the IRS Special Agents who investigated this case and Tax Division Trial Attorneys Jason H. Poole and Matthew J. Mueller, who prosecuted the case.
Mercado’s scheme was uncovered by the IRS, which leads to the question, how widespread is tax evasion in the construction industry? This case serves as a reminder that tax evasion is a serious crime with severe consequences.
The guilty plea of Axel Rafael Mercado is a significant blow to those who would seek to cheat the system. It is a testament to the hard work and dedication of the IRS and the U.S. Attorney’s Office in bringing this case to justice.
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Key Facts
- State: Florida
- Category: White Collar Crime
- Source: DOJ Press Release ↗
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