Villafranca Iris, Off-the-Books Payroll Scheme, Florida 2023

ORLANDO, FL – In a shocking case of exploitation and tax evasion, four Honduran nationals have been indicted for operating an off-the-books cash payroll system that cheated the IRS out of millions in employment taxes and left workers without benefits or protections.

The indictment, returned by a federal grand jury in Orlando last week, charges Iris Villafranca, Mario Flores, Osman Zapata, and Cristofer Oseguera Giron with conspiracy to operate an unlicensed money transmitting business and conspiracy to defraud the United States. Villafranca faces additional charges of conspiracy to commit wire fraud and filing false tax returns.

According to the indictment, the defendants used a series of shell companies to run an unlicensed check cashing and cash courier service business that cashed approximately $89 million in checks from subcontractors in the construction industry. The subcontractors allegedly paid their workers in cash, and the defendants charged a percentage of the dollar amount of the checks they cashed as a fee.

This scheme allowed construction contractors and subcontractors to pay their workers in cash without regard to required payroll taxes or whether the workers were legally authorized to work in the United States. The defendants allegedly caused the filing of false tax documents with the IRS to conceal the off-the-books payroll scheme and made only minimal employment tax deposits.

The indictment also alleges that Villafranca filed false individual income tax returns for 2019 through 2022 that did not report all the income she earned from the scheme and also did not report rental income she earned from her real estate.

If convicted, Villafranca faces a maximum penalty of five years in prison for conspiracy to operate an unlicensed money transmitting business, a maximum penalty of 20 years in prison for conspiracy to commit wire fraud, and a maximum penalty of five years in prison for conspiracy to commit tax fraud. She additionally faces a maximum penalty of three years in prison for each count of filing false tax returns.

The case was investigated by IRS Criminal Investigation and Homeland Security Investigations. Senior Litigation Counsel Sean Beaty and Trial Attorneys Kavitha Bondada and Rebecca A. Caruso of the Tax Division, and Assistant U.S. Attorney Amanda Daniels for the Middle District of Florida are prosecuting the case.

An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

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