January 17, 11

NEWS / Miami Contractor Sentenced to 24 Months in Prison for Employment Tax Fraud

MIAMI – Axel Rafael Mercado was sentenced today by U.S. District Court Judge Patricia A. Seitz to 24 months in prison for tax evasion, the Justice Department and the Internal Revenue Service (IRS) announced. Mercado was also ordered to pay $352,605 in restitution to the United States.

According to court documents, from 2005 through 2007, Mercado, who owns Mercado Enterprises Inc., attempted to evade a large part of his company’s federal employment taxes. To avoid his employment tax obligations, Mercado caused the company’s checks to be written to shell companies, which were supposedly legitimate subcontractors, but which in fact did no work for Mercado Enterprises. Mercado would then direct those checks to be cashed at a local check-cashing store, which was aware of the scheme, and use the cash to pay his workers. Mercado never reported the existence of the employees, never reported the cash wages of the employees, never filed employment tax returns and never paid the required employment tax.

Wifredo A. Ferrer, U.S. Attorney for the Southern District of Florida, and John A. DiCicco, Acting Assistant Attorney General for the Department of Justice, Tax Division, commended the IRS special agents who investigated the matter and Tax Division Trial Attorneys Jason H. Poole and Matthew J. Mueller who prosecuted the case.

http://www.justice.gov/opa/pr/2011/January/11-tax-044.html

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