Scheme Involved Defrauding Workers Comp. Insurers Travelers of Approximately $244,000
The owner of two Hopkinton construction companies pleaded guilty this week in federal court to charges that he defrauded his workers’ compensation insurer, Travelers, of $244,000 in premiums and the IRS of $1.1 million in employment taxes.
Dariusz Pietron, 51, pleaded guilty on May 15, 2024 to three counts of failure to collect and pay over employment taxes and one count of mail fraud. As part of a plea agreement with prosecutors, Mr. Pietron agreed to a sentence of 18 months in prison, restitution to the IRS and insurance companies, and forfeiture of $244,000. U.S. District Judge Indira Talwani scheduled sentencing for Aug. 28, 2024.
The Tax Fraud Scheme
Mr. Pietron owned and operated TJM Construction, Inc. from 2012 to 2016 and Point Construction, Inc. from 2016 to 2018, according to court documents. The companies did framing work for a large national home builder and had about 20 employees at any given time.
Prosecutors say that from 2012 to 2018, Mr. Pietron paid his employees mostly by check and sometimes in cash, but failed to report a total of $4,378,259 in wages to the IRS. By underreporting employee wages, Mr. Pietron avoided paying $1,107,699 in federal employment taxes, including Social Security, Medicare, and income taxes that should have been withheld from workers’ paychecks.
To conceal the wages, Mr. Pietron recruited and paid two employees to set up shell companies and open bank accounts that he controlled. Mr. Pietron deposited funds into the shell company accounts and then used that money to pay the wages of his TJM and Point employees.
The Insurance Fraud Scheme
Pietron also failed to disclose to Travelers Insurance Company the actual wages he paid to employees, which resulted in him paying less in workers’ compensation insurance premiums than what he would have otherwise owed. He accomplished this by using the three shell companies to make it appear as if TJM and Point’s employees were subcontractors to whom Pietron had no tax obligations.
“Pietron thereby failed to pay more than $1.1 million in employment taxes and defrauded Travelers of approximately $244,000,” the U.S. Attorney’s Office said in a statement.
Charges and Plea Agreement
The charges of failure to pay employment taxes each carry a sentence of up to five years in prison, three years of supervised release and a fine of $250,000 or twice the gross gain or loss. The mail fraud charge carries a maximum sentence of 20 years in prison, three years of supervised release and a $250,000 fine.
Under the terms of Mr. Pietron’s plea agreement, the U.S. Attorney’s Office will recommend a sentence of 18 months in prison, 36 months of supervised release, restitution of $1,107,699 to the IRS and $244,157 to Travelers Insurance, and forfeiture of $244,157.
Mr. Pietron also agreed to forfeit $244,157 in a money judgment, representing the proceeds of his mail fraud offense. If the assets cannot be located or have been transferred or sold, the government said it will seek forfeiture of any other property Mr. Pietron owns up to the same amount.
Combating Tax and Insurance Fraud
The case is part of an ongoing effort by state and federal authorities to combat tax fraud and insurance fraud in the construction industry. Employers in the industry have been known to pay workers off the books or misclassify them as independent contractors to avoid taxes and insurance obligations. E,g., See Agency Checklists’ article of March 18, 2024, “Roofing Company Owners Accused Of $627K Workers’ Comp Fraud And $2M COVID Relief Scam.”
The Prosecution Team
Acting United States Attorney Joshua S. Levy; Harry Chavis, Jr., Special Agent in Charge of the Internal Revenue Service Criminal Investigation, Boston Field Office; and Katherine Mulligan, Chief of Investigations for the Insurance Fraud Bureau of Massachusetts made the announcement today. Assistant United States Attorney Victor A. Wild of the Securities, Financial & Cyber Fraud Unit is prosecuting the case against Mr. Pietron
