Contractor Admits $1.3 Million Insurance and Tax Fraud Scheme
Scheme Involved Defrauding Insurer Travelers of Approximately $244,000
The owner of two Hopkinton construction companies pleaded guilty this week in federal court to charges that he defrauded his workers’ compensation insurer, Travelers, of $244,000 in premiums and the IRS of $1.1 million in employment taxes.
Dariusz Pietron, 51, pleaded guilty on May 15, 2024 to three counts of failure to collect and pay over employment taxes and one count of mail fraud. As part of a plea agreement with prosecutors, Mr. Pietron agreed to a sentence of 18 months in prison, restitution to the IRS and insurance companies, and forfeiture of $244,000. U.S. District Judge Indira Talwani scheduled sentencing for Aug. 28, 2024.
The Tax Fraud Scheme
Mr. Pietron owned and operated TJM Construction, Inc. from 2012 to 2016 and Point Construction, Inc. from 2016 to 2018, according to court documents. The companies did framing work for a large national home builder and had about 20 employees at any given time.
Prosecutors say that from 2012 to 2018, Mr. Pietron paid his employees mostly by check and sometimes in cash, but failed to report a total of $4,378,259 in wages to the IRS. By underreporting employee wages, Mr. Pietron avoided paying $1,107,699 in federal employment taxes, including Social Security, Medicare, and income taxes that should have been withheld from workers’ paychecks.
To conceal the wages, Mr. Pietron recruited and paid two employees to set up shell companies and open bank accounts that he controlled. Mr. Pietron deposited funds into the shell company accounts and then used that money to pay the wages of his TJM and Point employees.
“Pietron thereby failed to pay more than $1.1 million in employment taxes and defrauded Travelers of approximately $244,000,” the U.S. Attorney’s Office said in a statement.
The Insurance Fraud Scheme
In addition to the tax fraud, Mr. Pietron defrauded two insurance companies that provided workers’ compensation coverage to TJM and Point from 2014 to 2018. Prosecutors say Mr. Pietron underreported his employee payroll to the insurers by $244,157, fraudulently reducing the premiums he had to pay.
Charges and Plea Agreement
The charges of failure to pay employment taxes each carry a sentence of up to five years in prison, three years of supervised release and a fine of $250,000 or twice the gross gain or loss. The mail fraud charge carries a maximum sentence of 20 years in prison, three years of supervised release and a $250,000 fine.
Under the terms of Mr. Pietron’s plea agreement, the U.S. Attorney’s Office will recommend a sentence of 18 months in prison, 36 months of supervised release, restitution of $1,107,699 to the IRS and $244,157 to Travelers Insurance, and forfeiture of $244,157.
Mr. Pietron also agreed to forfeit $244,157 in a money judgment, representing the proceeds of his mail fraud offense. If the assets cannot be located or have been transferred or sold, the government said it will seek forfeiture of any other property Mr. Pietron owns up to the same amount.
Combating Tax and Insurance Fraud
The case is part of an ongoing effort by state and federal authorities to combat tax fraud and insurance fraud in the construction industry. Employers in the industry have been known to pay workers off the books or misclassify them as independent contractors to avoid taxes and insurance obligations. E,g., See Agency Checklists’ article of March 18, 2024, “Roofing Company Owners Accused Of $627K Workers’ Comp Fraud And $2M COVID Relief Scam.”
The Prosecution Team
Acting United States Attorney Joshua S. Levy; Harry Chavis, Jr., Special Agent in Charge of the Internal Revenue Service Criminal Investigation, Boston Field Office; and Katherine Mulligan, Chief of Investigations for the Insurance Fraud Bureau of Massachusetts made the announcement today. Assistant United States Attorney Victor A. Wild of the Securities, Financial & Cyber Fraud Unit is prosecuting the case against Mr. Pietron
