A Florida businessman has pleaded guilty to orchestrating a massive $28 million payroll scheme that defrauded both the federal government and insurance companies, according to court documents filed this week.
Alexis Garcia, who managed Tape Drywall Services Inc., admitted to conspiring to defraud the United States by running an elaborate off-the-books cash payroll system designed to evade employment taxes. The Justice Department confirmed Garcia entered his guilty plea before Magistrate Judge Kyle C. Dudek in the Middle District of Florida.
How did the scheme work? Between 2017 and 2019, Garcia and a co-conspirator cashed more than 3,600 checks totaling approximately $28 million, using the funds to pay workers in cash. This shadowy payment system allowed them to avoid reporting wages to the IRS and skip the legally required withholding of Social Security, Medicare, and federal income taxes.
“Garcia and his co-conspirator defrauded workers’ compensation companies by substantially misrepresenting the amount of Tape Drywall’s payroll,” federal prosecutors stated in court documents. The scheme involved providing cash to foremen who then paid workers directly, deliberately circumventing normal payroll channels.
Millions in Lost Tax Revenue
The financial impact was substantial. Garcia’s actions caused a loss to the United States exceeding $4.2 million in unpaid taxes, the Justice Department revealed. This includes evaded Social Security and Medicare contributions that fund critical social safety net programs.
But the tax evasion wasn’t the only illegal activity. The scheme also targeted workers’ compensation insurance companies through significant underreporting of Tape Drywall’s actual payroll figures, resulting in artificially lowered insurance premiums that didn’t reflect the company’s true workforce size.
Garcia now faces serious consequences for his actions. He could receive up to five years in prison, along with a period of supervised release, restitution requirements, and additional monetary penalties. The final sentencing decision will be made by a federal district court judge who will consider U.S. Sentencing Guidelines and other statutory factors, authorities noted.
The case highlights the government’s ongoing efforts to combat payroll tax evasion schemes that undermine funding for essential government programs. IRS Criminal Investigation led the probe with assistance from Homeland Security Investigations, demonstrating the multi-agency approach to tackling financial crimes.
Senior Litigation Counsel Michael C. Boteler and Assistant U.S. Attorney Yolande G. Viacava are handling the prosecution, which comes amid increased scrutiny of construction industry labor practices in Florida.
The conviction represents just one case in what law enforcement officials describe as a persistent problem in labor-intensive industries, where cash payments and unreported wages can create competitive advantages for unscrupulous operators while leaving honest businesses struggling to compete. For workers caught in these schemes, the consequences often include reduced Social Security benefits and lack of proper insurance coverage when injuries occur.
