Lowell temp agency owner admits hiding more than $6 million in payroll while obtaining workers’ compensation coverage based on false payroll records
The owner of a Lowell temporary employment agency has pleaded guilty in federal court to a long-running scheme that concealed more than $6 million in payroll from tax authorities and workers’ compensation insurers.
Henry Lam, 68, pleaded guilty on May 27 before Chief U.S. District Judge Denise J. Casper to 15 counts of failure to collect or pay over employment taxes and one count of mail fraud based on workers’ compensation premium misrepresentations. Sentencing is scheduled for Aug. 27, 2026.
According to federal prosecutors, Lam owned and operated HL Temporary Services, a Lowell-based temporary staffing agency that supplied workers to client companies throughout Massachusetts between 2016 and 2023. The agency’s clients paid HL Temporary Services for workers’ services, typically by check. Prosecutors alleged that Lam routinely cashed those checks at check-cashing businesses and paid many employees in cash rather than through traditional payroll systems.
More Than $6 Million in Payroll Allegedly Hidden
Federal authorities alleged that between January 2016 and September 2023, Lam cashed more than $6.2 million in client checks and failed to report approximately $6.1 million in employee wages on quarterly payroll tax filings. Prosecutors alleged that the underreported payroll enabled him to avoid more than $2.4 million in federal employment taxes.
The indictment charged that some quarterly IRS Forms 941 filed by HL Temporary Services understated employee wages, while other required returns were not filed at all.
False Payroll Records Used to Reduce Workers’ Compensation Premiums
According to court records, Lam obtained workers’ compensation coverage for HL Temporary Services from October 2015 through January 2022. Prosecutors alleged that he submitted false payroll journals and tax records that substantially understated payroll and misrepresented the nature of employees’ work. The false information allegedly allowed the agency to obtain workers’ compensation coverage at lower premium levels than would have been charged based on actual payroll exposure.
The indictment further alleged that the inaccurate payroll information resulted in premium adjustment notices and refund checks that reflected lower premiums than HL Temporary Services actually owed.
Plea Agreement Calls for More Than $1.65 Million in Restitution
Under the plea agreement, federal prosecutors and Lam jointly agreed to recommend restitution totaling $1,652,573.31. Of that amount, $1,564,459.31 would be paid to the Internal Revenue Service.
The agreement also calls for forfeiture of $88,114, representing proceeds attributed to the mail fraud offense.
Federal prosecutors agreed to recommend a sentence of 15 months in prison, 24 months of supervised release, no fine, and the required special assessment. The recommendation is not binding on the court.
As part of any period of supervised release, Lam agreed to cooperate with IRS examination and collection officials, provide financial information needed to determine his tax liabilities, file accurate tax returns, and make good-faith efforts to pay outstanding taxes, interest, and penalties.
Insurance Fraud Bureau Assisted Investigation
U.S. Attorney Leah B. Foley and Thomas Demeo, Special Agent in Charge of IRS Criminal Investigation in Boston, announced the guilty plea. Federal prosecutors said the Insurance Fraud Bureau of Massachusetts assisted in the investigation. Assistant U.S. Attorney Kristen A. Kearney of the Securities, Financial & Cyber Fraud Unit is prosecuting the case.
Lam was originally indicted by a federal grand jury in June 2025 and arrested the following month. At his May 27 change-of-plea hearing, he withdrew his not guilty plea and admitted guilt on all 16 counts charged in the indictment.
