PROVIDENCE – A Woonsocket business owner was sentenced Thursday to probation and jail time his role in defrauding the IRS of $2.8 million, U.S. Attorney of Rhode Island Zachary A. Cunha said.
Jesus Jose Mendez, 44, of Woonsocket, pleaded guilty on April 7 in federal court to conspiracy to defraud the U.S. and wire fraud. On Thursday, Mendez, co-owner of J&J Drywall Inc., was sentenced to three years probation, including 52 weekends of detention at the Donald W. Wyatt Detention Facility in Central Falls.
Mendez co-owned the Massachusetts-incorporated subcontracting business with Jamie Zambrano, also of Woonsocket. In court, Cunha’s office said, Mendez admitted that he and his co-owner paid most of J&J Drywall’s employees in cash; failed to properly account for, withhold and pay federal and state taxes; and failed to make required unemployment insurance contributions.
Mendez and Zambrano were initially indicted on federal charges in October 2020. According to court documents, between 2013 and 2017, the two allegedly used check-cashing businesses to cash more than 600 business receipt checks totaling more than $16 million. Mendez then allegedly traveled to construction sites with backpacks full of cash and left the backpacks to pay employees.
During the same time period, the two also allegedly made more than $4 million in deposits to the business’s bank accounts, where most of the remaining millions were allegedly used to pay laborers under the table, Cunha’s office said.
In total, the IRS calculated a $2.8 million federal tax loss, and the Mass. Department of Labor calculated a $62,730 unemployment contribution loss, Cunha’s office said.
Zambrano is still a fugitive facing 25 counts for his involvement in the scheme, including tax evasion.
