Four Honduran Nationals Indicted In $89 Million ‘Undocumented Workers’ Tax Scheme In Florida

Expanded Summary of the Indictment:

In May 2025, a federal grand jury in Orlando, Florida, indicted four Honduran nationals—Iris Villafranca, Mario Flores, Osman Zapata, and Cristofer Oseguera Giron—for their alleged roles in a sophisticated, multi-million-dollar off-the-books payroll scheme. According to the indictment, the defendants operated an unlicensed check-cashing business through a network of shell companies, cashing approximately $89 million in checks from construction subcontractors between 2015 and 2022. This illicit operation allowed contractors to pay workers in cash, effectively avoiding employment tax obligations and facilitating the employment of undocumented workers.

The scheme also involved significant insurance fraud, where the defendants provided false information to workers’ compensation insurance providers, leasing certificates of insurance to multiple subcontractors. This misrepresentation minimized the reported number of workers and wages, further hiding the true scale of the cash payments. Beyond the fraudulent check-cashing and insurance activities, Villafranca faces additional charges for conspiracy to commit wire fraud and for filing false tax returns that omitted income derived from the scheme, as well as other undeclared rental income. For a more detailed account, read the full article here: tampafp.com.

How Money Services Businesses (MSBs) Are Vulnerable and Can Protect Themselves

Money Services Businesses (MSBs), including check-cashing services, money transmitters, and currency exchangers, are integral to the financial ecosystem. However, their operations are uniquely vulnerable to exploitation for illicit activities such as money laundering, tax evasion, and fraud, as vividly illustrated by the recent indictment in Florida. Understanding these vulnerabilities and proactively implementing enhanced due diligence (EDD) protocols is essential for MSBs to safeguard their operations and maintain compliance with regulatory standards.

Vulnerabilities of MSBs:

1. Lack of Regulatory Oversight: Some MSBs operate without proper licensing or registration, making them susceptible to misuse. Unlicensed operations can evade regulatory scrutiny, allowing illicit activities to go undetected.
2. High Cash Volume Transactions: MSBs often handle large volumes of cash, which can be attractive for individuals seeking to launder money or conduct untraceable transactions. Without stringent monitoring, these cash flows can conceal illegal activities.
3. Inadequate Customer Due Diligence: Failing to implement robust Know Your Customer (KYC) and Enhanced Due Diligence (EDD) protocols can allow individuals to use MSB services anonymously, facilitating fraudulent schemes and the movement of illicit funds. This is particularly concerning when customers use multiple shell companies to mask true ownership or the source of funds.
4. Use of Shell Companies: As seen in the Florida case, perpetrators can establish shell companies to create a facade of legitimacy, enabling them to process fraudulent transactions and evade taxes. Without EDD, MSBs may unknowingly support these schemes.

Protective Measures for MSBs:

1. Implement Robust AML Programs: Develop and maintain comprehensive Anti-Money Laundering (AML) programs that include risk assessments, internal controls, independent audits, and employee training. Regularly update these programs to address emerging threats.
2. Enhance Customer Due Diligence and EDD: Adopt stringent KYC procedures, but do not stop there. For high-risk customers, implement Enhanced Due Diligence (EDD) protocols, which include:
   • Verifying the customer’s identity using multiple reliable sources.
   • Understanding the nature of the customer’s business, including verifying the legitimacy of corporate structures and identifying beneficial owners.
   • Conducting background checks on customers and associated businesses.
   • Requesting additional documentation, such as tax records, proof of insurance, and business licenses, especially for customers in high-risk industries.
   • Monitoring customer transaction patterns for anomalies or red flags.
3. Monitor and Report Suspicious Activities: Utilize transaction monitoring systems to detect unusual patterns or behaviors. Promptly file Suspicious Activity Reports (SARs) with the Financial Crimes Enforcement Network (FinCEN) when suspicious transactions are identified.
4. Regularly Conduct Risk Assessments: Evaluate your customer base, transaction types, and geographic reach to identify high-risk areas. Use these assessments to adjust your AML/EDD protocols accordingly.
5. Conduct Regular Audits and Compliance Reviews: Periodically review and audit operations to ensure adherence to AML policies and regulatory requirements. Address any identified deficiencies promptly to mitigate risks.
6. Employee Training and Awareness: Provide ongoing training to employees about AML regulations, red flags for suspicious activities, and internal reporting procedures. An informed workforce is vital for early detection and prevention of fraudulent activities.

Concerned About Your MSB's Vulnerabilities? ComplyCheck Can Help.

If you are an MSB owner or operator, the recent case in Florida is a stark reminder of the risks you face. Ensuring compliance is not just about avoiding fines—it's about protecting your business and reputation. ComplyCheck specializes in helping MSBs like yours develop and maintain strong AML/BSA compliance programs, including Enhanced Due Diligence (EDD) protocols, transaction monitoring, and employee training.

Don’t leave your business exposed. Contact ComplyCheck today to schedule a complimentary compliance review and take proactive steps to protect your MSB. Visit ComplyCheck.co or email us at requests@complycheck.co to learn more.