Mass. Construction Company Owner Charged with Payroll, Workers’ Comp Fraud

June 15, 2021

The owner of a Revere, Massachusetts, construction company was sentenced on June 10, 2021, on charges of engaging in an under-the-table payroll fraud scheme that defrauded the government of more than $500,000 and insurance carriers of approximately $93,000.

Ralph Caruso, of Wenham, Massachusetts, was sentenced by U.S. Senior District Court Judge George A. O’Toole to three years of probation with the first year to be served in home confinement. Caruso was also ordered to pay restitution of $546,320 to the IRS and $93,430 to workers’ compensation insurance carriers and forfeiture of $93,000. The government recommended a sentence of one year and one day in prison.

In January 2021, Caruso pleaded guilty to seven counts of filing false tax returns and five counts of mail fraud.

For tax years 2008 through 2016, Caruso paid wages to his employees via payroll and under-the-table. The employee wages paid through payroll accounts were reported to the IRS and taxes were properly withheld and paid in returns.

However, the under-the-table wages totaled more than $2.2 million, which Caruso did not collect, account for or pay to the IRS in required withholding and FICA taxes. The cash payments to employees were funded through off-the-books accounts Caruso created and used solely to pay the under-the-table wages. By failing to pay the required taxes on $2.2 million in wages, Caruso evaded more than $546,000 in federal taxes.

Caruso was also required by state law to carry workers’ compensation insurance. Workers’ compensation premiums were based on an audit of his payroll records to determine actual wages paid. By providing only the payroll records for the wages paid on the books, Caruso underreported the wages for which he owed insurance premiums by more than $93,000.

Acting United States Attorney Nathaniel R. Mendell and Ramsey E. Covington, Acting Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston made the announcement. Assistant U.S. Attorney Victor A. Wild of Mendell’s Securities, Financial & Cyber Fraud Unit prosecuted the case.

Source: U.S. Attorney’s Office, District of Massachusetts

Topics Workers' Compensation Fraud Abuse Molestation Massachusetts Construction

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