Local businessmen indicted for alleged scheme to avoid federal employment taxes

PROVIDENCE – Two Woonsocket men have been indicted on federal charges related to an alleged tax-avoidance scheme, the U.S. Justice Department announced on Tuesday.

Jesus Jose Mendez and Jamie Zambrano, operators of J&J Drywall Inc., which later was known as Empire Inc., are alleged to have conspired to avoid payment of federal employment taxes by paying a substantial number of employees in cash and failing to report millions of dollars in payments to employees.

The DOJ alleged that the two men only reported $4.3 million in wages paid between 2013 and 2017, but said that the company received roughly $20.1 million in gross receipts in that time.

The DOJ also alleged that the men used check-cashing businesses to cash more than 600 business receipts totaling more than $16 million over that time, while only depositing more than $4 million into the company’s bank accounts.

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The U.S. Attorney’s Office District of Rhode Island claimed that payment to employees was often delivered to work sites in cash in backpacks. The government also claims that many of the firm’s employees were living in the country illegally.

The men have been named in a 28-count federal indictment.