A federal judge has sentenced Ralph Caruso, 72, the owner of a Revere construction equipment company, to three years of probation with the first year served in home confinement for employment tax and workers compensation fraud. The judge also ordered Mr. Caruso to pay restitution of $546,320 to the IRS and $93,430 to AIG and A.I.M Mutual, the two workers’ compensation insurance carriers Mr. Caruso defrauded. Also, since the government prosecuted his workers’ compensation fraud under the mail fraud statute, he forfeited an additional amount equal to his fraudulent gain, $93,430, to the United States.
The scheme to pay some employees under the table continued for eight years
Mr. Caruso is the Caruso Company owner, which includes Caruso Equipment Company, Inc., Caruso Construction and Equipment Company, Inc., Northgate Recycling Company, Inc., and Circle Trucking, Inc. The Caruso Companies have a principal place of business in Revere, Massachusetts, and are a major source for heavy construction equipment rentals in the Boston area with over 250 pieces of construction machinery in stock. The company supplies its equipment with or without operators and will employ somewhere between 100 and 400 individuals during an average year.
Mr. Caruso had pleaded guilty to a twelve‑count information, which alleged seven counts of his failure to pay withholding taxes over an eight-year period and five counts of mail fraud involving fraudulent reports to the two workers’ compensation carriers over the same eight-year period.
The information alleged that from 2008 until 2016, he operated a scheme while running Caruso Companies that defrauded the Internal Revenue Service (IRS) of at least $ 546,320 in federal taxes and defrauded AIG of $58,848.00 and A.I.M Mutual of $34,582.00 in workers compensation insurance premiums by filing false reports of workers’ wages.
Mr. Caruso admitted that he intentionally caused his companies to fail to report more than $ 2.2 million in wages paid under-the-table to employees, intentionally failed to withhold employee taxes from those wages, intentionally failed to pay the employer 7.6% share of FICA to the IRS on those wages, and intentionally concealed the under-table wages during audits by workers’ compensation insurance carriers.
Although not prosecutable in federal court, the government noted that Mr. Caruso’s actions would have defrauded the state of Massachusetts of $ 112,812 in uncharged state taxes, calculated as 5.1% of $2,212,000 in unreported wages.
The federal guideline sentence for Mr. Caruso was between 21 to 27 months in prison
By statute, defendants convicted in federal court all have a detailed presentence investigation report prepared by a federal probation officer who interviews the defendant and conducts background research into all aspects of the defendant’s life history, character, criminal history, the facts involved in the crime, family relations, and finances. The report also calculates based on the federal sentencing guidelines what the offense level and, therefore, the range of imprisonment is based upon that sentencing score.
In Mr. Caruso’s case, the presentence report calculated that Mr. Caruso’s total offense level was 16, with no prior criminal history. This score under the federal sentencing guidelines warranted Mr. Caruso receiving a sentence of imprisonment somewhere between 21 to 27 months.
Mr. Caruso moves the judge to deviate from the guidelines
While both parties submitted sentencing memorandum to the district court for the sentencing hearing on June 10, Mr. Caruso also submitted through counsel a more specific motion to deviate downward from the guidelines.
The motion consisted of details concerning Mr. Caruso’s personal circumstances hoping that to persuade the court to deviate from the Level 16 guidelines imposing prison sentences to reducing, based upon the factors in the motion, the level of the offenses to Level 10, which would allow for probation and home confinement.
The motion to deviate advised the court that Mr. Caruso had fully accepted his guilt and already made restitution in full to the IRS and to the two insurance companies that he had defrauded. Additionally, he had paid the forfeiture equal to $93,430.00 for his fraudulent insurance transactions, pursuant to the mail fraud statute.
Also, Mr. Caruso’s submission to the judge noted that the majority, but not all, of the unreported wages, were paid to individuals who plowed snow for the Caruso Companies and who had requested they be paid in cash. Mr. Caruso admitted the wrongfulness of his conduct, but his intentions were “to motivate employees to show up to work during and shortly after snowstorms to get the job done.”
Mr. Caruso’s motion, however, went far beyond stating he had made restitution and had foolishly paid his snowplow workers in cash to get them to work.
Over sixty persons submitted letters on Mr. Caruso’s behalf, including a court clerk, active and retired police officers, a former prosecutor, officers of charities, friends, and family. All praised Mr. Caruso as “a very giving person;” as a person who gave his time and money to local charities, as a person who is “always helping others,” “always supporting the underdog,” and who “never asks for anything in return;” as someone who “has the rare quality of treating the janitor and the CEO of a company in the exact same way” and as someone who has “taken friends ‘off the street’ who have lost their homes, with no place to go, into his own home and given them a chance to make a comeback.”
The motion also detailed that a prison sentence for Mr. Caruso could have serious, if not fatal, consequences. The motion asked the sentencing judge to consider that, as established by his medical records submitted under seal, Mr. Caruso suffered from several serious medical conditions, included:
(1) significantly blocked cardiovascular arteries.
(2) a significantly weak and enlarged heart that poses an imminent risk of sudden death.
(3) a significant lipid disorder; and
(4) prostate cancer.
Also, he was scheduled to undergo heart bypass surgery which will involve bypassing five or six arteries and replacement of a heart valve.
Mr. Caruso’s board-certified cardiologist opined in a letter to the judge that the stress Mr. Caruso would experience from incarceration could prove to be fatal.
The judge allows Mr. Caruso’s motion for departure from sentencing guidelines
On June 10, 2021, Mr. Caruso had his sentencing hearing before Senior Justice George A. O’Toole.
The United States Attorney, while acknowledging the circumstances concerning Mr. Caruso’s health issues, viewed his crimes differently based upon the way Mr. Caruso had paid employees under the table with cash or checks that did not go through the Caruso companies’ books. The United States recommended to the judge a lesser sentence than the guidelines provided for a sixteen-offense level. However, the sentence the government recommended was for Mr. Caruso to serve a year and a day in federal prison.
The judge sentencing Mr. Caruso did not accept the United States Attorney’s recommendation but instead allowed Mr. Caruso’s motion to reduce the level of Mr. Caruso’s offense level to ten. Thus reduced, the judge could impose a sentence of probation and home confinement.
The federal team that prosecuted Mr. Caruso’s fraud
Acting United States Attorney Nathaniel R. Mendell and Ramsey E. Covington, Acting Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston, made the announcement concerning the sentencing of Mr. Caruso while Assistant U.S. Attorney Victor A. Wild of Mendell’s Securities, Financial & Cyber Fraud Unit prosecuted the case.
