BOSTON, Jan. 27 2005 – LAWFUEL – The Law News Network — Five individuals have been charged in federal court with participating in a massive tax and insurance fraud scheme in connection with their operation of temporary employment agencies in
Southeastern Massachusetts. They are accused of paying employees over $30
million in cash “under-the-table” in order to evade millions of dollars in
payroll taxes and workers compensation premiums for their businesses.
United States Attorney Michael J. Sullivan; Joseph A. Galasso, Special
Agent in Charge of the U.S. Internal Revenue Service, Criminal Investigation;
Kenneth W. Kaiser, Special Agent in Charge of the Federal Bureau of
Investigation in New England; and Daniel L. Skelly, Chief of Investigations
for Insurance Fraud Bureau of Massachusetts, announced today that DANIEL W.
McELROY, age 53, of Sharon, AIMEE J. KING McELROY, age 47, of Sharon, and XIEU
VAN SON, age 47, of Lowell, have been indicted by a federal grand. In
addition, CHARLES J. WALLACE, age 53, of East Bridgewater, and DICH TRIEU, age
56, formerly of Lowell, now living in Utica, New York, have been charged in an
The Indictment charges McELROY, his wife, KING McELROY, and VAN SON with
conspiracy to defraud the United States and to commit mail fraud by deceiving
workers compensation insurers regarding the size and payroll of their
business. In addition, McELROY and KING McELROY are charged with 3 counts of
mail fraud in connection with the workers compensation insurance scheme and
with 14 counts of procuring false tax returns. VAN SON is also charged with
wilful failure to supply tax information, specifically social security numbers
for workers that were hired by the McELROY organization.
The Information charges WALLACE with conspiracy. TRIEU is charged in the
Information with wilful failure to supply tax information, specifically social
security numbers for workers that were hired by the McELROY organization.
Both the Indictment and the Information allege that all of the defendants
were involved, at various levels, in the operation of temporary employment
agencies that did business under the names Daily A. King Labor, Inc., Pro
Temp. Company, Dich Trieu, PTC and Precission (sic) Temp. Corp. It is alleged
that from January 1993 through June 2001, in order to avoid employment taxes,
such as Social Security and Medicare, and in order 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.
It is alleged that in excess of $30 million in cash was paid out to employees
as a result of the scheme. It is alleged that when filing tax returns, the
defendants disclosed only the portion of their payroll that was paid by check,
thereby concealing additional millions of dollars in wages that had been paid
in cash. Additionally it is alleged that when reporting payroll to their
workers compensation insurers, McELROY and WALLACE prepared forged federal tax
forms, which showed an even smaller portion of their actual payroll – causing
a fraudulent reduction in the workers compensation insurance premiums they
were required to pay.
McELROY and KING McELROY owned and operated the temporary employment
businesses, with WALLACE providing accounting and bookkeeping services.
According to the Information, TRIEU was formally listed as doing business
under the name Pro Temp Company but actually exercised little or no control
over that business, which in actuality functioned as an arm of McELROY and
KING McELROY’s business. Similarly, as alleged in the Indictment, VAN SON was
formally listed as the President of Precission Temp Corp, but he also
exercised no real control over that entity.
“This is one of the largest operations of its kind that we have
prosecuted,” stated U.S. Attorney Sullivan. “By evading millions of dollars
in taxes as alleged, the defendants not only harmed the United States and the
insurance companies, they also put themselves in a position to underbid
responsible employers who pay their fair share into the system.”
If convicted, the defendants face the following maximum penalties: On the
charge of Conspiracy, McELROY, KING McELROY, VAN SON and WALLACE each face up
to 5 years in prison, to be followed by 3 years of supervised release, and a
fine of $250,000. For each of the three counts of the mail fraud with which
they are charged, McELROY and KING McELROY face maximum sentences of 5 years
in prison, to be followed by 3 years of supervised release, and a fine of
$250,000. For each of the fourteen counts charging procuring false tax
returns, McELROY and KING McELROY face maximum sentences of 3 years in prison,
to be followed by 3 years of supervised release, and a fine of $250,000. For
the charges of willful failure to supply tax information, VAN SON and TRIEU
each face a maximum of 1 year in prison, to be followed by 1 year of
supervised release, and a fine of $100,000.
The case was investigated by Special Agents of the U.S. Internal Revenue
Service, Criminal Investigation and the Federal Bureau of Investigation, with
extensive assistance from the Insurance Fraud Bureau of Massachusetts. It is
being prosecuted by Assistant U.S. Attorneys Paul G. Levenson and Seth Berman
in Sullivan’s Economic Crimes Unit.
The details contained in the Indictment and Information are allegations.
The defendants are presumed to be innocent unless and until proven guilty
beyond a reasonable doubt in a court of law.