Special agents of the Internal Revenue Service arrested Argyrios Mavros, 56, of Peabody, on an eleven-count indictment returned by the Federal grand jury sitting in Boston on September 29, 2020. Mr. Mavros owned Mavros Construction, Inc., a contracting company that operated from 2009 until June 30, 2017. In June 2017, the Secretary of State dissolved the corporation.
The indictment alleges that Mr. Mavros operated a scheme to defraud his workers’ compensation insurance carrier between 2012 and 2017 by fraudulently reporting his company’s payroll and the corporation’s number of workers. The indictment also alleges that between 2011 and 2017, his company, Mavros Construction, defraud the IRS of approximately $1 million in payroll taxes.
$3.3 million in customers’ checks turned into cash for under-the-table employee payments
The charges state that beginning in the last quarter of 2011, and until early 2017, Mr. Mavros cashed more than $3.3 million in customer checks payable to Mavros Construction at a Peabody check-cashing business. After cashing the customers’ checks, he used the proceeds, in part, to make cash payments to his employees for their unreported wages.
As the owner and operator of Mavros Construction, Mr. Mavros had a duty to collect and pay over to the IRS the federal employment taxes due and owing under FICA and other taxes to be credited toward his employees’ income tax obligations.
For the ten tax periods included in the indictment, Mr. Mavros failed to report these employees’ existence or their wages in the corporation’s required quarterly 941 tax filings. During this period, Mavros Construction avoided paying Social Security and Medicare taxes on employee wages and did not withhold any federal income taxes due from these employees’ wages. As a result, by Mr. Mavros’ company failing to withhold Social Security, Medicare, and income taxes on more than $2.5 million in wages, it avoided paying the IRS more than $1 million.
The fraudulent 941 submissions beyond the statute of limitations
Although the indictment stated that Mr. Mavros ran his check-cashing scheme from 2011 until the end of 2017, the ten counts in the indictment for failing to collect or pay over withholding taxes related to the ten quarterly reports due between October 31, 2014, and January 31, 2017. Any fraudulent 941 wage reports between 2011 and July 31, 2014, fell outside the tax code’s six-year statute of limitations for criminal prosecution.
Payroll reported to workers’ compensation carrier omitted $2.5 million in wages
Consistent with submitting fraudulent 941 payroll reports to the IRS, Mr. Mavros failed to report these employees or their compensation to his workers’ compensation insurance carrier,
In the ordinary course of business, Mavros Construction’s insurer audited the company’s payroll records, including its 941 employment withholding records, to determine the correct insurance premium owed based upon the wages paid and the type of work performed by the company’s workers.
Through the fraudulent 941 forms submitted to its insurer, Mr. Mavros hid from the insurer that his company had between five and thirteen employees. Thus, the audits conducted on behalf of his workers’ compensation insurance carrier did not catch that Mr. Mavros defrauded his workers’ compensation insurance carrier of additional premiums based upon the $2.5 million in unreported cash wages the company had paid its employees.
The Court arraigns Mr. Mavros and sets bail by video
After his arrest and his waiving his right to be physically present in the courtroom, Mr. Mavros appeared by video before Magistrate Judge Marianne B. Bowler. Judge Bowler informed Mr. Mavros of his rights and the charges against him. During the proceeding, the Assistant United States Attorney representing the Government informed Mr. Mavros and Judge Bowler of the maximum penalties for the charges and that the Government would not move for Mr. Mavros’ pretrial detention. The Government anticipated Mr. Mavros’ trial to last one week with ten witnesses testifying.
Mr. Mavros’ bail of $25,000 and surrender of his Greek passports
Since the United States Attorney’s Office did not argue for Mr. Mavros’ pretrial detention, Judge Bowler set a $25,000 unsecured appearance bond for his release pending trial.
The standard release conditions require that Mr. Mavros obtain no travel documents while the case is pending and that Mr. Mavros had to restrict any travel to the Continental United States. However, since Mr. Mavros had a Greek passport, the judge ordered that he surrender that passport with forty-eight hours to the federal probation office.
Also, the federal conditions of Mr. Mavros’ release, and other federal defendants released on a personal bond, provided that the commission of a federal felony during the period of the release constitutes a separate crime that carries an additional consecutive prison term of not more than ten years – i.e., a sentence in addition to any sentence imposed for the original charge.
Mail fraud charge against Mr. Mavros carries a possible twenty-year sentence
On the mail fraud charges, Mr. Mavros faces up to twenty years in prison, up to three years of supervised release, and a fine of up to $250,000 on each count. He faces up to five years in prison per each of the ten counts on the tax charges, up to three years of supervised release, and a fine of up to $10,000 on each count.
If Mr. Mavros pleads guilty or is found guilty after a trial, a federal district court judge will impose a sentence based on the U.S. Sentencing Guidelines and any applicable statutory sentencing laws.
Most federal criminal charges settled by a plea agreement
In federal criminal cases where a defendant agrees to plead guilty, the U.S. Attorney arrives at a sentencing recommendation based on the Sentencing Guidelines.
The plea agreement and the recommendation made under a plea agreement are not legally binding on the federal judge assigned to a defendant’s case. Judges can deviate upward to the maximum statutory sentence allowed and downward from the statutorily mandated Sentence Guidelines. However, most judges do not materially deviate from the parties’ recommendations under the Guidelines without good reason as a practical matter.
The U.S. Attorney, the IRS, and the Insurance Fraud Bureau involved in the case
United States Attorney Andrew E. Lelling and Joleen Simpson, Acting Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston, announced the grand jury’s indictment of Mr. Mavros. Assistant U.S. Attorney Kristen A. Kearney of Lelling’s Securities, Financial & Cyber Fraud Unit, is prosecuting the case.
In making the announcement, they praised the valuable assistance provided by the Insurance Fraud Bureau of Massachusetts concerning the bringing of the insurance fraud charges against Mr. Mavros.
