Federal Investigators Expose Underground Construction Cash Network
By Staff Reporter
iSkyNews.com (ISN) – Published June 13th, 2026
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JACKSONVILLE, Fla. — An Orlando man has been sentenced to federal prison after prosecutors say he helped operate a construction payroll scheme that defrauded the Internal Revenue Service, workers’ compensation insurers, and facilitated the employment of undocumented workers.
According to the U.S. Attorney's Office for the Middle District of Florida, Santiago Humberto Erazo-Zelaya, 32, of Orlando, was sentenced to 14 months in federal prison after pleading guilty to conspiracy to commit tax fraud and conspiracy to commit wire fraud.
The court also ordered Erazo-Zelaya to pay more than $765,000 in restitution to the IRS, over $26,000 to an insurance company, and entered a money judgment of $181,529, representing proceeds from the fraud scheme.
News Brief Summary
- Orlando man sentenced to 14 months in federal prison.
- More than $765,000 owed to the IRS for unpaid payroll taxes.
- Scheme involved approximately $3 million in payroll checks.
- Conspirators allegedly used a shell company to "rent" workers' compensation insurance.
- Fraudulent certificates were provided to contractors as proof of insurance coverage.
- Workers' wages were paid through the shell company and distributed in cash.
- Conspirators collected roughly $181,500 in fees from the operation.
- Federal authorities say the scheme helped facilitate the employment of undocumented workers.
- Defendant is a Honduran citizen illegally present in the United States and faces deportation after serving his sentence.
According to court documents, Erazo-Zelaya created a shell construction company and obtained a workers' compensation insurance policy covering only a small payroll. Prosecutors say he and his co-defendant then used that policy to provide insurance certificates to construction crews seeking subcontracting work throughout Florida.
Authorities said contractors issued payroll checks to the shell company, which were cashed and distributed to workers after the conspirators deducted a fee, typically around six percent of payroll.
Federal investigators determined that approximately $3 million in payroll checks were processed through the scheme. Prosecutors say neither the shell company nor contractors properly reported the wages or paid required payroll taxes, including Social Security, Medicare, and federal income taxes.
Investigators also found that the workers' compensation policy was purchased based on an estimated payroll of just over $100,000. Had legitimate coverage been purchased for the actual payroll volume, insurance premiums would have exceeded $587,000, according to court records.
Officials said the scheme provided a financial advantage to contractors and subcontractors while shifting costs away from employers who followed the law.
Erazo-Zelaya's co-defendant, Gregorio Jose Fuentes-Zelaya, was previously sentenced to 33 months in federal prisonfor his role in the operation.
The investigation was conducted by Homeland Security Investigations (HSI), IRS Criminal Investigation, and the Florida Department of Financial Services as part of the Homeland Security Task Force.
Federal officials stated that Erazo-Zelaya is illegally present in the United States and is expected to face deportation proceedings after completing his prison sentence.
Source: U.S. Attorney's Office, Middle District of Florida
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