NYC Contractor Defrauded $3M In Off-The-Books Payroll Caper: DA

NEW YORK CITY — An off-the-books payroll scheme by the owner of Queens drywall and carpentry companies defrauded the state out of $3 million and kept workers dangerously uninsured, prosecutors said.

Juan Escobar, 46, and his companies faces a litany of felony fraud and conspiracy charges from an indictment filed Thursday by Manhattan District Attorney Alvin Bragg.

Escobar underreported his payrolls to the New York State Insurance Fund, which let him skirt paying insurance payments and left workers uninsured, according to the indictment. He then paid off-the-books employees in cash-filled envelopes in meetings near a 7 train stop in Sunnyside, prosecutors said.

“Juan Escobar allegedly defrauded the system and lined his own pockets at the expense of the safety of his workers,” Bragg said in a statement.

“Workers should be afforded every protection possible."

Starting in late 2013, Escobar and his Queens companies — Infinity Drywall Corp., Infinity Quality Services, JMC Drywall Corp., and JJM Builders — fraudulently reported smaller employee payrolls to the state, prosecutors said.

Those false reports grossly reduced the amount of insurance payments Escobar and his companies were required to pay, authorities said.

Escobar then issued cashier's checks to shell companies in the name of family members, prosecutors said. Once cashed, they would appear as legitimate payments to subcontractors but in reality were siphoned to his off-the-books payroll, authorities said.

The covert payroll totaled more than $50,000 a week, and Escobar cashed more than $26 million in checks over the scheme's eight years, prosecutors said.

Escobar hid workers from his payrolls by telling them to falsely claim workplace injuries occurred elsewhere and avoid inspectors, authorities said. He also paid employees cash in exchange for not filing workers' compensation claims, prosecutors said.