EAST BRIDGEWATER MAN SENTENCED TO FIVE YEARS IN PRISON FOR“UNDER-THE-TABLE” PAYROLL FRAUD

Boston, MA... An East Bridgewater man has been sentenced to a five year prison term for his role in assisting a massive tax and insurance fraud scheme conducted by temporary employment agencies in Southeastern Massachusetts. The agencies paid employees over $39 million in cash “under-the-table” in order to evade millions of dollars in payroll taxes and workers compensation premiums.

United States Attorney Michael J. Sullivan; Douglas A. Bricker, Special Agent in Charge of the U.S. Internal Revenue Service, Criminal Investigation - Boston Field Office; Warren Bamford, Special Agent in Charge of the Federal Bureau of Investigation - New England Field Division; and Anthony DiPaolo, Chief of Investigations for the Insurance Fraud Bureau of Massachusetts, announced CHARLES J. WALLACE, age 57, of East Bridgewater, was sentenced late yesterday to a term of five years in federal prison.

In March 2005, WALLACE pled guilty to charges that he conspired with others, including Daniel W. McElroy and Aimee J. King McElroy, both of North Dartmouth, Xieu Vanson of Lowell and Dich Trieu, formerly of Lowell, to defraud the United States by evading taxes and to commit mail fraud by deceiving workers compensation insurers regarding the size and payroll of their business.

From 1993 to June 2001, WALLACE served as an accountant for, and helped to operate, temporary employment agencies that did business under the names Daily A. King Labor, Inc., Pro Temp. Company, PTC and Precission (sic) Temp. Corp. To avoid employment taxes, such as Social Security and Medicare, and to fraudulently reduce the businesses’ insurance premiums for workers compensation insurance, the defendants arranged to pay a large share of the businesses’ payroll in cash. In excess of $39 million in unreported cash was paid out to employees as a result of the scheme.

Daniel W. McElroy and Aimee J. King McElroy are scheduled for trial in January 2008. Dich Trieu pled guilty and was sentenced to 2 years probation. Xieu Vanson pled guilty and is awaiting sentencing.

In sentencing WALLACE to the statutory maximum sentence, the Court noted that this was “an extreme case” of under-the-table payroll fraud, involving sustained criminal activity for over eight years. The Judge stated that he was imposing the maximum sentence in order to “send a strong message” that what looks like easy money to be made by evading employment tax and insurance obligations can be “costly in the end.”

The case was investigated by the U.S. Internal Revenue Service, Criminal Investigation Boston Field Office and the Federal Bureau of Investigation, New England Field Division, with assistance from the Insurance Fraud Bureau of Massachusetts. It is being prosecuted by Assistant U.S. Attorneys Paul G. Levenson, Jonathan Mitchell and Sarah Walters of Sullivan’s Economic Crimes Unit.