A federal decide has sentenced a Hopkinton development contractor to 18 months in jail for orchestrating a classy scheme that defrauded staff’ compensation insurers of $244,157 in premiums and evaded over $1.1 million in federal employment taxes.
Prison Expenses for Tax and Insurance coverage Fraud Result in Responsible Plea
On Might 14, 2024, Dariusz Pietron, 51, pleaded responsible to 3 counts of failure to gather and pay over employment taxes in violation of 26 U.S.C. § 7202 and one depend of mail fraud in violation of 18 U.S.C. § 1341. The mail fraud fees had been explicitly associated to his systematic underpayment of workers’ compensation insurance premiums by means of a posh scheme of shell corporations and hidden payroll.
Pietron’s Agreed-upon Jail Sentence
Pietron’s case concerned a binding plea settlement underneath Federal Rule of Prison Process 11(c)(1)(C). Underneath this settlement, each the U.S. Legal professional’s Workplace and Pietron’s protection counsel requested Decide Talwani to impose:
– 18 months incarceration
– 36 months of supervised launch
– Restitution of $1,107,699.56 to the IRS
– Restitution and forfeiture of $244,157 to Vacationers Insurance coverage
– A compulsory particular evaluation of $400
– A high-quality to be decided by the Court docket
One of these plea settlement, generally known as a “C” plea, is exclusive as a result of as soon as accepted by the decide, it binds the court docket to impose the precise sentence negotiated by the events. If Decide Talwani had disagreed with the proposed sentence, her solely possibility would have been to reject your entire plea settlement, doubtlessly forcing the case to trial or new plea negotiations.
The agreed-upon 18-month jail time period represented a downward departure from the relevant federal sentencing pointers. In response to the plea settlement, Pietron’s complete offense stage was 17 mixed together with his legal historical past class of “I” (no prior legal file), which might sometimes name for a sentence between 24-30 months.
Following the sentencing listening to, the Court docket launched Pietron underneath all beforehand set recognizance situations and the brand new situation that he report back to a facility designated by the Bureau of Prisons earlier than 2:00 PM on March 10, 2025, to start serving his jail sentence.
The Insurance coverage Fraud Scheme
In response to the federal government’s sentencing memorandum, Pietron operated a considerable development operation offering framing companies to Pulte Properties of New England, a significant nationwide homebuilder. Between 2012 and 2018, he ran his enterprise by means of TJM Development, Inc. and Level Development, Inc.
Pietron defrauded his staff’ compensation insurers of $244,157 in premiums by manipulating his firm buildings and concealing payroll info. He achieved this by means of a posh scheme involving three shell corporations: Edmilson Development (2013-14), Eddy Development, Inc. (2014-15), and Con Development (2015-2018). These entities, nominally owned by Pietron’s staff however managed by him, had been used to hide the true dimension of his workforce from his insurers.
Throughout annual insurance coverage audits, Pietron intentionally hid wage info that may have triggered increased premiums. His fundamental corporations, TJM Development, and Level Development, didn’t report back to Vacationers and Zurich Insurance coverage the substantial wages paid by means of the shell corporations.
The federal government’s memorandum famous that “his schemes stretched over a number of years, together with after his staff’ compensation insurer threatened to cancel his coverage as a result of he didn’t take part in an annual premium audit.”
Over the six years, Pietron hid over $4.3 million in payroll from his insurers. As an alternative of paying correct premiums based mostly on this payroll, he pocketed the distinction between the minimal premiums paid by means of his shell corporations and the considerably increased premiums he ought to have paid based mostly on his true workforce and payroll.
The Human Value of Pietro’s Premium Fraud
The implications of Pietron’s premium fraud scheme grew to become starkly evident when one in all his staff suffered catastrophic accidents after falling from a roof in September 2014. The autumn resulted in a damaged again and everlasting paralysis.
In response to prosecutors, Pietron had structured his insurance coverage protection to reduce premiums by having his shell corporations – Edmilson Development, Eddy Development, and Con Development – receive solely minimal staff’ compensation protection. In the meantime, his fundamental corporations, TJM Development, and Level Development, didn’t report back to their insurance coverage carriers (Vacationers and Zurich) the wages paid to staff by means of these shell entities.
When the office accident occurred, prosecutors alleged that Pietron tried to deflect legal responsibility by instructing staff to inform investigators that the injured worker labored for Eddy Development reasonably than his fundamental corporations.
The federal government’s sentencing memorandum detailed how Pietron “exercised his management over susceptible staff by threatening them with deportation in the event that they complained of accidents or advised medical personnel they labored for Pietron.” In response to the federal government, this created an surroundings the place staff had been afraid to report accidents or problem unsafe working situations.
Whereas Pietron disputed some particulars about his response to the accident – particularly denying allegations that he had instructed staff to take the injured worker house reasonably than report the accident – prosecutors emphasised that his insurance coverage fraud scheme had real-world penalties for injured staff searching for protection for office accidents.
Systematic Tax Evasion
The scope of Pietron’s payroll scheme provides perception into the dimensions of his premium fraud. Over six years, his corporations paid greater than $4.3 million in unreported wages, damaged 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
Sample of Deception
The federal government’s memorandum highlighted how Pietron’s scheme went past easy premium fraud. He systematically:
– Modified firm names to evade detection
– Maintained management of shell firm financial institution accounts whereas placing them in staff’ names
– Failed to supply required tax and employment documentation to staff
– Claimed enterprise deductions for the hid wages
– Threatened susceptible staff with deportation in the event that they reported accidents
– Maintained Social Safety qualification for himself and his spouse whereas denying it to staff
Prosecution’s Declare of Pietron’s Fraudulent Motive
Regardless of Pietron’s claims of modest means, prosecutors famous that Pietron maintained “massive balances in private checking accounts, two IRA accounts, and a big residence in Hopkinton price one and 1 / 4 million with no mortgage listed.” In its sentencing memorandum, the federal government argued that this demonstrated greed reasonably than misguided enterprise necessity motivated his fraud.
Prosecution Group and Investigation
The investigation concerned coordinated efforts between a number of businesses. The case was prosecuted by Assistant U.S. Legal professional Victor A. Wild of the Securities, Monetary & Cyber Fraud Unit, with investigative assist from:
– Inside Income Service Prison Investigation Boston Discipline Workplace
– Insurance coverage Fraud Bureau of Massachusetts
– Tom Demeo, Performing Particular Agent in Cost of the IRS Prison Investigation
– Katherine Mulligan, Chief of Investigations for the Insurance coverage Fraud Bureau
