A Portland area contractor has been sentenced to federal prison for his role in a multiyear scheme to evade the payment of payroll and income taxes on the wages of his workers.
Melesio Gomez-Rivera, 49, of Aloha, Oregon, and owner of and operator of Novatos Construction, a residential construction company, was sentenced to 30 months in federal prison and three years’ supervised release. He also has been ordered to pay $29.9 million in restitution to the IRS.
According to court documents, he and four other construction company owners conspired with each other and David A. Katz, 47, of Tualatin, Oregon, the operator of Check Cash Pacific Inc., a check-cashing business with locations in the Portland area and Vancouver, Washington, to defraud the U.S. government by facilitating under-the-table cash wage payments to construction workers.
Others charged with conspiracy to defraud the U.S. include Martin S. Elizondo, 48, also of Tualatin; Jorge Peraza, 51, and Natallie N. Graham, 48, both of Beaverton, Oregon; and Jose L. Altamirano, Sr., 62, of Bend, Oregon.
Katz was additionally charged with four counts of filing false currency transaction reports by the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).
In March, Gomez-Rivera pleaded guilty. The others are awaiting a jury trial scheduled to begin December 5.
According to court records, from January 2014 to December 2017, Elizondo, Gomez-Rivera, and Peraza evaded the employment tax obligations of their construction companies and assisted other construction companies in doing the same. They cashed or had others cash millions of dollars in payroll checks at various locations of Katz’s check-cashing business, used the cash to pay construction workers under the table, and filed false business and payroll tax returns.
Altamirano also is alleged to have used co-conspirators to cash payroll checks at Katz’s business to pay employees of his construction company under the table.
In addition, Graham is alleged to have worked in the office of a subcontracting company used to facilitate and organize the unreported cash payments to workers.
In total, Katz and his co-conspirators cashed approximately $192 million in payroll checks, causing a combined employment and individual income tax loss of $68 million, according to court records.
A federal grand jury in Portland returned a five-count indictment against the six alleged conspirators on December 2, 2021, following an investigation by the IRS-Criminal Investigation division.
Conspiracy to defraud the U.S. is punishable by up to five years in federal prison, a $250,000 fine, and three years supervised release. Filing false currency transaction reports is punishable by up to 10 years in federal prison, a $250,000 fine, and three years’ supervised release.