Business Partners’ $16M “Under the Table” Scheme Faces Sentencing

Posted on May 06, 2022

The co-owner of J&J Drywall, Jesus Jose Mendez, pleaded guilty to defrauding the IRS of more than two million dollars.

From 2013 to 2017, Mendez and his business partner, Jamie Zambrano, used check cashing businesses to cash more than 600 business checks totaling more than 16 million dollars. While under surveillance, Mendez and Zambrano cashed checks in Rhode Island and then took backpacks full of cash to construction sites, where they paid day laborers in cash.

During that time the business partners deposited four million dollars into their business bank accounts, often in amounts less than $10,000, to not attract any attention to themselves. They had a small number of employees on legitimate payroll, but the rest were paid under the table, eliminating the need to pay employment taxes.

The IRS estimated the federal tax loss at $2,821,463 and the Massachusetts Department of Labor calculated the loss of unemployment contributions at $62,730. Mendez is awaiting sentencing and Zambrano is on the run.