Two Honduran nationals, Iris Villafranca and Osman Donaldo Zapata, were sentenced on April 14 to 204 months and 51 months in prison, respectively, for their roles in an off-the-books cash payroll scheme that operated from 2015 to 2022. The scheme facilitated the illegal employment of undocumented workers in the United States and resulted in a loss of more than $38 million to the federal government.
The sentencing highlights ongoing efforts by federal authorities to address fraud schemes that undermine tax collection and legal employment practices. According to court documents, Villafranca and Zapata conspired with others to create shell companies that provided unlicensed check cashing services for construction industry subcontractors. These companies cashed approximately $89 million in checks, allowing contractors to pay workers in cash without proper tax withholding or regard for immigration status.
The defendants also filed false tax documents with the Internal Revenue Service (IRS) and defrauded workers’ compensation insurance providers by misrepresenting worker numbers and payroll amounts. Both pleaded guilty to conspiracy charges related to defrauding the United States and operating an unlicensed money transmitting business. Villafranca additionally pleaded guilty to filing false income tax returns from 2019 through 2022.
Villafranca was ordered to pay over $38 million in restitution and forfeit $89 million from criminal proceeds, while Zapata must pay more than $2.5 million. A co-conspirator, Francisco Alvarez, previously received four years of probation along with a restitution order exceeding $2.3 million. Another member is scheduled for sentencing in June.
Assistant Attorney General A. Tysen Duva of the Justice Department’s Criminal Division and U.S. Attorney Gregory W. Kehoe announced the sentences. The investigation involved IRS Criminal Investigation with support from Homeland Security Investigations, ICE ERO Miami (Orlando sub-office), Florida Highway Patrol, Customs and Border Protection, US Marshals Service, State Department, and Florida Department of Law Enforcement.
On April 7, the Department of Justice announced it had created a National Fraud Enforcement Division dedicated “to zealously investigate and prosecute those who steal or fraudulently misuse taxpayer dollars.” The department’s anti-fraud efforts are part of President Trump’s Task Force to Eliminate Fraud chaired by Vice President J.D. Vance.
The Justice Department serves as the principal federal agency for law enforcement according to its official website. It includes more than 115,000 employees operating across all states as well as internationally according to its official website. Its mission focuses on upholding rule of law while safeguarding civil rights as detailed on its official site.
Attorney General Merrick Garland has led the department since March 11, 2021 according to its official website, overseeing operations throughout over fifty countries worldwide according to its official website. Garland has also overseen major prosecutions such as those related to the Oklahoma City bombing case as per information on its official site.
