Four Indicted in Florida for Off-the-Books Payroll, Workers’ Comp Fraud

By /

May 8, 2025 |Orlando, FL — MedLegalNews.com – A federal grand jury in Orlando, Florida, has indicted four Honduran nationals in a significant comp fraud case involving workers’ compensation insurance and payroll tax evasion. The indictment alleges the defendants operated a multi-year cash-based payroll scheme that defrauded insurers and facilitated the illegal employment of undocumented construction workers.

Comp Fraud Scheme Involved $89 Million in Cashed Checks

According to the indictment, Iris Villafranca, Mario Flores, Osman Zapata, and Cristofer Oseguera Giron allegedly ran an unlicensed check-cashing and cash courier operation from 2015 to 2022. By using a network of shell companies, the defendants cashed approximately $89 million in checks from construction subcontractors, who then used the funds to pay workers off the books.

In return, the defendants charged a percentage fee for each cashed check, allowing contractors to skirt payroll tax obligations and avoid verifying workers’ legal employment status.

Workers’ Comp and IRS Fraud Alleged in Comp Fraud Scheme

The indictment reveals that this comp fraud scheme involved more than just payroll tax evasion. Prosecutors allege that the defendants:

  • Filed false employment tax documents and made only minimal deposits with the IRS, despite handling millions in payroll.
  • Leased workers’ compensation insurance certificates to contractors who were not genuinely insured, leaving workers vulnerable and insurers deceived.
  • Submitted fraudulent information to insurance companies, grossly underreporting payroll amounts and workforce sizes to secure lower premiums.

Additionally, Iris Villafranca faces heightened charges for conspiracy to commit wire fraud and filing false tax returns between 2019 and 2022. The indictment also claims that she failed to declare significant earnings from the fraudulent operations and concealed rental income from multiple real estate holdings.

According to the IRS Criminal Investigation Division, such comp fraud schemes undermine the integrity of both the tax system and the workers’ compensation framework, creating unfair advantages for dishonest employers while exposing workers to uninsured risks.

This case serves as a critical reminder of the ongoing efforts by federal agencies to clamp down on financial crimes that affect both public revenues and employee protections.

Possible Prison Time

If convicted, Villafranca faces:

  • Up to 20 years for conspiracy to commit wire fraud
  • Up to 5 years each for conspiracy to operate an unlicensed money transmitting business and conspiracy to commit tax fraud
  • Up to 3 years per count for filing false tax returns

Flores, Zapata, and Giron each face a maximum of 10 years—five years per conspiracy count.

A federal judge will determine sentences in accordance with the U.S. Sentencing Guidelines and statutory factors.

Joint Agency Investigation

The case against the four defendants for the alleged comp fraud scheme is being prosecuted by the Justice Department’s Tax Division in collaboration with the U.S. Attorney’s Office for the Middle District of Florida. The investigation was spearheaded by the IRS Criminal Investigation unit, with support from Homeland Security Investigations (HSI).

“These types of schemes undermine the integrity of both our tax and workers’ compensation systems,” stated Acting Deputy Assistant Attorney General Karen E. Kelly. She emphasized the government’s commitment to pursuing comp fraud that compromises worker protections and cheats the system.

This joint effort reflects the federal government’s continued focus on dismantling complex financial crimes, particularly those involving tax evasion, workers’ compensation fraud, and the exploitation of undocumented labor. The agencies involved have reinforced that prosecuting comp fraud remains a priority to protect workers, ensure fair business practices, and preserve the integrity of public systems.

As with any criminal case, all defendants are presumed innocent unless and until proven guilty in a court of law.

Stay informed on the latest federal crackdowns on comp fraud, payroll tax schemes, and workers’ compensation enforcement—subscribe to MedLegalNews.com for comprehensive updates and expert legal insights.

📰 Read More from MedLegalNews.com:

Scroll to Top