New York, NY – Manhattan District Attorney Alvin L. Bragg, Jr. recently announced the sentencing of Juan Escobar to six months in jail for defrauding the New York State Insurance Fund (“NYSIF”) of nearly $3 million in insurance premium payments. ESCOBAR, who previously pleaded guilty to Insurance Fraud in the Third Degree, will also have to pay $400,000 in restitution to New York State. His companies, INFINITY DRYWALL CORP., INFINITY QUALITY SERVICES INC., JMC DRYWALL CORP. and JJM BUILDERS, INC., previously pleaded guilty to Conspiracy in the Fourth Degree and were sentenced to a three-year conditional discharge.
“Juan Escobar went to great lengths to defraud New York State in order to increase his own bottom line. Hardworking New Yorkers should not be used as pawns by their employers in the pursuit of profit. Construction companies and their owners should be on notice that we will not tolerate this type of exploitation of workers and the public trust,” said District Attorney Bragg.
As admitted in the guilty pleas of Escobar and his companies, from November 18, 2013, to October 29, 2021, ESCOBAR defrauded NYSIF, which provides workers’ compensation and disability benefits for employers in New York State, by significantly underreporting his payroll during annual insurance premium audits. ESCOBAR cashed more than $26 million in checks at locations across Manhattan and Queens during the course of this scheme, using the cash to fund his companies’ unreported payrolls.
ESCOBAR and his companies, INFINITY DRYWALL CORP., INFINITY QUALITY SERVICES INC., JMC DRYWALL CORP. and JJM BUILDERS, INC., fraudulently reported the smaller employee payrolls to the state, grossly reducing the amount of insurance payments ESCOBAR and the companies were required to pay to NYSIF and leaving workers on large construction projects underinsured.
To facilitate the scheme and separate himself from the transactions, ESCOBAR issued cashier’s checks to shell companies in the names of family members, which were then cashed at his direction. The cashier’s checks were made to appear as legitimate payments to subcontractors for construction work. These proceeds were funneled to his off-the-books payroll, which typically totaled more than $50,000 a week.
ESCOBAR gave employees cash in envelopes near a 7 train stop in Sunnyside, Queens.
ESCOBAR hid the missing workers from the reported payroll using multiple tactics. He directed injured workers to falsely claim workplace injuries occurred elsewhere, told them to avoid detection from site safety inspectors or gave workers cash in exchange for failing to file workers’ compensation claims. ESCOBAR also failed to report the worker injuries to NYSIF. When a workers’ compensation claim did get filed, he would misrepresent the worker’s employment status.
The investigation began when Rackets and financial investigators from the Manhattan District Attorney’s Office identified extensive and suspicious financial transactions being conducted and directed by ESCOBAR and his drywall and carpentry companies.
Assistant D.A.s James J. Hanley and Zachary Weintraub are handling the prosecution of this case under the supervision of Assistant D.A.s Mike Ohm (Deputy Chief of the Rackets Bureau), Judy Salwen (Principal Deputy Chief of the Rackets Bureau), Christopher Conroy (Senior Advisor to the Investigation Division), and Jodie Kane (Chief of the Rackets Bureau and Acting Chief of the Investigation Division).
The investigation was led by former Rackets Investigator Amanda Bauza, Senior Investigator Samuel Morales and Investigator Genesis Cornielle, under the supervision of Walter Alexander (Chief Investigator), Michael Wigdor (Assistant Chief Racket Investigator), and Sgt. Daniel Clark-El. Trial Preparation Assistants Yanisa Campusano and Samantha Kritzer assisted with the investigation. Investigative support also came from the High Technology Analysis Unit (Director Steven Moran, Supervising Computer Forensic Analyst Doug Daus, and Cyber Response Investigator Lauretta Gorman) and Forensic Accounting & Financial Investigations Bureau (Senior Financial Investigator Nicholas Cangro and Forensic Accountant Investigator Edward Keegan). The Spanish Language Unit also provided support. Former Investigative Analyst Philetus Holt, former Trial Preparation Assistant Nicholas Quinn and former Principal Financial Investigator Robert Ryan also assisted with the case.
D.A. Bragg thanked the New York State Insurance Fund, in particular, Director of Investigations Jessica Silver, Investigative Officer Dominick Raspante and Auditor Granville Mo, as well as the New York State Department of Labor and the New York City Department of Investigation for their assistance in the investigation.
Source: Manhattan DA’s Office