The owner of a Peabody construction company, Argyrios Mavros, also known as Eric Mavros, 57, has pleaded guilty in Boston’s federal court to a $1 million scheme to defraud his company’s workers’ compensation insurer of premiums and the IRS of payroll taxes by failing to disclose how many workers he employed and paid in cash
Before ceasing operations and being dissolved by the Secretary of State, Mr. Mavros owned Mavros Construction, Inc., which operated out of 7B Webster Street, Peabody.
Mavros Construction provided roofing and carpentry services to residential customers in the Boston area. Between 2011 and 2016, the company would have at any one time between five and thirteen employees working on the company’s residential jobs.
Mr. Mavros converted $3.3 million of customers’ payment checks into cash
Although Mavros Construction’s clients would pay Mr. Mavros with checks, he mostly did not deposit these payments in the company’s bank account. Instead, he processed the checks through a Peabody check-cashing business.
Between 2011 and 2016, Mr. Mavros cashed more than $3.3 million in customer checks at this local check-cashing business to get cash to, in part, pay the company’s employees under the table.
Failure to withhold employment taxes and file quarterly statements
As part of his check-cashing scheme, Mr. Mavros did not report the correct number of employees or their wages in quarterly corporate tax filings. As a result, Mr. Mavros’ company did not pay Social Security and Medicare taxes on its employee wages nor any withholding on these cash wages for federal income taxes.
Consistent with failing to report the cash wages he was paying his employees, Mr. Mavros did not provide for any workers’ compensation insurance audit of his company’s payroll, accurate employment, employee tax withholding records, or bank records to verify the correct payroll figures. This suppression of correct payroll information defrauded his company’s insurer of premiums that the company should have paid based on the remuneration of its actual employees.
The fraud scheme avoided more than $1 million in federal taxes and insurance premiums
The federal prosecutors involved in Mavros’ case allege that he caused his company to fail to pay federal employment taxes and employee withholding taxes on more than $2.5 million in wages, resulting in over a $1 million tax loss and insurance premium underpayment.
Ten counts of tax fraud and one count of insurance fraud by use of the mails
Based on the evidence gathered by special agents of the IRS and investigators from the Massachusetts Insurance Fraud Bureau, a federal grand jury indicted Mr. Mavros in September 2020 on ten counts of employment tax fraud and one count of mail fraud involving insurance premium suppression.
The charge of failure to collect and pay over taxes provides for a sentence of up to five years in prison, three years of supervised release, and a fine of $10,000. The charge of mail fraud provides for a sentence of up to 20 years in prison, three years of supervised release, and a fine of $250,000 or twice the gross gain or loss, whichever is greater.
Sentencing scheduled for February 2022 after completion of a presentence report
The scheduling of a sentencing hearing in federal court must allow for the United States Probation Office to conduct a presentence report. The defendant must receive the completed report at least thirty-five days before the sentencing hearing.
In compiling the report, the Probation Office will interview the defendant and investigate the defendant’s history and characteristics, including: (i) any prior criminal record; (ii) the defendant’s financial condition; and (iii) any circumstances affecting the defendant’s behavior that may be helpful in imposing sentence or in correctional treatment.
Also, the report will identify for the judge all applicable federal sentencing guidelines and calculate the defendant’s offense level and criminal history category; state the resulting sentencing range and kinds of sentences available. The report may also contain, when appropriate, any basis for the judge departing from the applicable recommended sentencing range and non-prison programs and resources available to the defendant.
Senior District Court Judge William G. Young has scheduled Mr. Mavros’ sentencing for Feb. 17, 2022.
The prosecution team involved in Mr. Mavros’ case
Acting United States Attorney Nathaniel R. Mendell and Joleen D. Simpson, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston, made the announcement. The Insurance Fraud Bureau of Massachusetts also provided the federal authorities with valuable assistance. Assistant U.S. Attorney Kristen A. Kearney of Mendell’s Securities, Financial & Cyber Fraud Unit is prosecuting the case.