Press Release
RHODE ISLAND RESIDENT SENTENCED FOR HIS ROLE IN A SOUTH FLORIDA PAYROLL TAX EVASION SCHEME
December 19, 2008
FOR IMMEDIATE RELEASE
R. Alexander Acosta, United States Attorney for the Southern District of Florida, and Betty N. Stewart, Acting Special Agent in Charge, Internal Revenue Service, Criminal Investigation Division (“IRS-CID”), announced today that defendant James R. Monahan, 45, formerly of Palm Beach County, FL, was sentenced to 30 months’ imprisonment, to be followed by 2 years of supervised release after pleading guilty to his role in a long-term federal payroll tax evasion scheme involving two South Florida residential construction businesses. Specifically, Monahan pled guilty to a two count Information, dated December 14, 2006, which charged him with conspiracy to evade employment taxes and to defraud the IRS, in violation of Title 18, United States Code, Section 371; and to causing a financial institution to file false currency transaction reports (“CTRs”), in violation of Title 18, United States Code, Sections 5324(a)(2) and 5324(d)(2).
According to documents filed in court and court testimony, Monahan was the owner of Northeast Custom Builders, Inc., a corporation ostensibly involved in residential construction. Defendant Monahan unlawfully enriched himself by aiding and assisting in the fraudulent evasion of payment of federal payroll taxes on wages paid to the employees of Kodiak Construction and Management, Inc. (“Kodiak”), a West Palm Beach, FL, business, and Woody’s Construction, Inc. (“Woody’s”), a business previously located in Margate, FL. Monahan conspired with others, including Lucky Mata, the owner of Kodiak, and Leroy Edward Felt, Jr., the owner of Woody’s, to defraud the IRS by paying cash wages to many of Kodiak’s and Woody’s employees, and thus did not withhold or pay payroll taxes on these wages.
To execute the fraud, Mata, Felt and others issued large corporate checks to various individuals and entities for fictitious subcontracting expenses. Some of these checks were issued to Monahan’s company, Northeast Custom Builders. Monahan would, in turn, cash the corporate checks at financial institutions, retaining a portion of the cash as a check cashing fee, and return the remaining cash to Mata, Felt and others for use in paying wages. When cashing the checks, Monahan did not disclose to the banks that the checks were being cashed for the benefit of Kodiak or Woody’s, causing the financial institutions to file CTRs that did not contain accurate information about the purpose of the checks.
On February 25, 2008, Lucky Mata was sentenced to serve a total of ten years in prison after having been convicted at trial on multiple charges relating to his evasion of federal payroll taxes. Kodiak underpaid its federal payroll taxes by nearly $3,000,000 between 1994 and 2005, during which time it paid its workers nearly $18,000,000 in cash payments without any employer withholding.
On December 5, 2008, Leroy Edward Felt, Jr. was sentenced to 48 months in prison after pleading guilty to participating in the federal payroll tax evasion scheme in the operation of his business, Woody’s Construction, Inc. Felt failed to report to the Internal Revenue Service that Woody’s had paid $14,521,082.39 in actual payroll wages. As a result of this understatement, Felt knowingly failed to pay at least $2,178,162 in federal payroll taxes to the Internal Revenue Service.
These cases were prosecuted by Assistant U.S. Attorney Stephen Carlton. Mr. Acosta commended the investigative efforts of the IRS-CID for their work on this case.
A copy of this press release may be found on the website of the United States Attorney's Office for the Southern District of Florida at http://www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the District Court for the Southern District of Florida at http://www.flsd.uscourts.gov or on http://pacer.flsd.uscourts.gov.
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