When Small Business Owners Cross the Line with Taxes

A Massachusetts man who ran a staffing agency admitted he hid over six million dollars in worker pay for years. Instead of processing payroll through official banking channels, he cashed checks at local stores and paid many employees in cash. This allowed him to cut corners on taxes and insurance, robbing the government of more than one and a half million dollars. Between 2016 and 2023, court papers say, the agency owner told client companies to send payments straight to him. He skipped depositing those checks and instead exchanged them for cash at check-cashing spots across the state. Workers received their wages in different ways—some got envelopes of cash, others received checks, and a few got a mix of both. Over time, nearly six point one million dollars in payments never showed up on any tax forms.

Prosecutors say he either lied on quarterly tax reports or skipped sending them altogether. The missing paperwork meant he avoided paying required payroll taxes. In another move, he gave two insurance companies false payroll records from 2015 to 2022. By claiming lower payroll numbers and describing workers’ jobs incorrectly, he kept his workers’ compensation insurance costs artificially low. The government charges him with failing to collect and pay taxes plus mail fraud. If found guilty on both counts, he could face up to five years for the tax charge and up to twenty years for the fraud charge. The court could also impose fines and require him to repay everything plus extra charges. Under a court deal, prosecutors recommend fifteen months in prison, no fine, and two years of supervised release. He would also have to repay over one million dollars to the IRS and about eighty-eight thousand dollars to the insurers. The agreement mentions he has no past criminal record. A sentencing hearing is set for late August.

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