A federal judge has sentenced a Hopkinton construction contractor to 18 months in prison for orchestrating a sophisticated scheme that defrauded workers’ compensation insurers of $244,157 in premiums and evaded over $1.1 million in federal employment taxes.
Criminal Charges for Tax and Insurance Fraud Lead to Guilty Plea
On May 14, 2024, Dariusz Pietron, 51, pleaded guilty to three counts of failure to collect and pay over employment taxes in violation of 26 U.S.C. § 7202 and one count of mail fraud in violation of 18 U.S.C. § 1341. The mail fraud charges were explicitly related to his systematic underpayment of workers’ compensation insurance premiums through a complex scheme of shell companies and hidden payroll.
Pietron’s Agreed-upon Prison Sentence
Pietron’s case involved a binding plea agreement under Federal Rule of Criminal Procedure 11(c)(1)(C). Under this agreement, both the U.S. Attorney’s Office and Pietron’s defense counsel asked Judge Talwani to impose:
– 18 months incarceration
– 36 months of supervised release
– Restitution of $1,107,699.56 to the IRS
– Restitution and forfeiture of $244,157 to Travelers Insurance
– A mandatory special assessment of $400
– A fine to be determined by the Court
This type of plea agreement, known as a “C” plea, is unique because once accepted by the judge, it binds the court to impose the exact sentence negotiated by the parties. If Judge Talwani had disagreed with the proposed sentence, her only option would have been to reject the entire plea agreement, potentially forcing the case to trial or new plea negotiations.
The agreed-upon 18-month prison term represented a downward departure from the applicable federal sentencing guidelines. According to the plea agreement, Pietron’s total offense level was 17 combined with his criminal history category of “I” (no prior criminal record), which would typically call for a sentence between 24-30 months.
Following the sentencing hearing, the Court released Pietron under all previously set recognizance conditions and the new condition that he report to a facility designated by the Bureau of Prisons before 2:00 PM on March 10, 2025, to begin serving his prison sentence.
The Insurance Fraud Scheme
According to the government’s sentencing memorandum, Pietron operated a substantial construction operation providing framing services to Pulte Homes of New England, a major national homebuilder. Between 2012 and 2018, he ran his business through TJM Construction, Inc. and Point Construction, Inc.
Pietron defrauded his workers’ compensation insurers of $244,157 in premiums by manipulating his company structures and concealing payroll information. He accomplished this through a complex scheme involving three shell companies: Edmilson Construction (2013-14), Eddy Construction, Inc. (2014-15), and Con Construction (2015-2018). These entities, nominally owned by Pietron’s employees but controlled by him, were used to conceal the true size of his workforce from his insurers.
During annual insurance audits, Pietron deliberately concealed wage information that would have triggered higher premiums. His main companies, TJM Construction, and Point Construction, failed to report to Travelers and Zurich Insurance the substantial wages paid through the shell companies.
The government’s memorandum noted that “his schemes stretched over several years, including after his workers’ compensation insurer threatened to cancel his policy because he failed to participate in an annual premium audit.”
Over the six years, Pietron concealed over $4.3 million in payroll from his insurers. Instead of paying proper premiums based on this payroll, he pocketed the difference between the minimal premiums paid through his shell companies and the substantially higher premiums he should have paid based on his true workforce and payroll.
The Human Cost of Pietro’s Premium Fraud
The consequences of Pietron’s premium fraud scheme became starkly evident when one of his workers suffered catastrophic injuries after falling from a roof in September 2014. The fall resulted in a broken back and permanent paralysis.
According to prosecutors, Pietron had structured his insurance coverage to minimize premiums by having his shell companies – Edmilson Construction, Eddy Construction, and Con Construction – obtain only minimal workers’ compensation coverage. Meanwhile, his main companies, TJM Construction, and Point Construction, failed to report to their insurance carriers (Travelers and Zurich) the wages paid to employees through these shell entities.
When the workplace accident occurred, prosecutors alleged that Pietron attempted to deflect liability by instructing workers to tell investigators that the injured employee worked for Eddy Construction rather than his main companies.
The government’s sentencing memorandum detailed how Pietron “exercised his control over vulnerable workers by threatening them with deportation if they complained of injuries or told medical personnel they worked for Pietron.” According to the government, this created an environment where workers were afraid to report injuries or challenge unsafe working conditions.
While Pietron disputed some details about his response to the accident – specifically denying allegations that he had instructed workers to take the injured employee home rather than report the accident – prosecutors emphasized that his insurance fraud scheme had real-world consequences for injured workers seeking coverage for workplace injuries.
Systematic Tax Evasion
The scope of Pietron’s payroll scheme gives insight into the scale of his premium fraud. Over six years, his companies paid more than $4.3 million in unreported wages, broken down by prosecutors as follows:
– 2012: $436,732 in unreported payroll
– 2013-2014: $816,859 in unreported payroll
– 2014-2015: $791,117 in unreported payroll
– 2015: $691,402 in unreported payroll
– 2016: $756,846 in unreported payroll
– 2017: $830,978 in unreported payroll
– 2018 (First Quarter): $54,323 in unreported payroll
Pattern of Deception
The government’s memorandum highlighted how Pietron’s scheme went beyond simple premium fraud. He systematically:
– Changed company names to evade detection
– Maintained control of shell company bank accounts while putting them in employees’ names
– Failed to provide required tax and employment documentation to workers
– Claimed business deductions for the concealed wages
– Threatened vulnerable workers with deportation if they reported injuries
– Maintained Social Security qualification for himself and his wife while denying it to employees
Prosecution’s Claim of Pietron’s Fraudulent Motive
Despite Pietron’s claims of modest means, prosecutors noted that Pietron maintained “large balances in personal checking accounts, two IRA accounts, and a large residence in Hopkinton worth one and a quarter million with no mortgage listed.” In its sentencing memorandum, the government argued that this demonstrated greed rather than misguided business necessity motivated his fraud.
Prosecution Team and Investigation
The investigation involved coordinated efforts between multiple agencies. The case was prosecuted by Assistant U.S. Attorney Victor A. Wild of the Securities, Financial & Cyber Fraud Unit, with investigative support from:
– Internal Revenue Service Criminal Investigation Boston Field Office
– Insurance Fraud Bureau of Massachusetts
– Tom Demeo, Acting Special Agent in Charge of the IRS Criminal Investigation
– Katherine Mulligan, Chief of Investigations for the Insurance Fraud Bureau
