A Boston-area contractor who failed to pay $2.8 million in employment taxes by falsely claiming his workers were subcontractors was sentenced to 18 months in December and ordered to pay full restitution, according to Massachusetts federal court documents.

The man, Mauricio Baiense, owner of Contract Framing Builders Inc. of Medford, Ma., entered a plea of guilty last April on counts of failing to pay over employment taxes, conspiring to defraud the government by interfering with tax laws, helping prepare a false return and lying to a federal agency.

A naturalized U.S. citizen who arrived from Brazil in 1993, Baiense asked the court to spare him prison time, asserting that he was unaware of the fraud his former business partner hatched before fleeing the jurisdiction back to Brazil, court records indicated.

"To be clear: This is not a case where a misguided individual buried his head in the sand and hoped the IRS wouldn't notice some missing taxes," prosecutors said in their sentencing request. "This is a case of flagrant dishonesty, of shameless disregard for the law, even when faced with a gruesome death."

Prosecutors were pushing the court for two years, citing the death of one worker on a job that launched the initial investigation that subsequently unraveled a years-long scheme of tax fraud and deceit; the judge was unmoved by Baiense’s claims.

The Plot

According to the U.S. Department of Justice, Baiense orchestrated an elaborate tax evasion scheme between 2013 and 2017. Instead of fulfilling his obligation to withhold and remit payroll taxes to the IRS, Baiense funneled nearly $11 million through shell entities that pretended to be subcontractors. 

Prosecutors proved the entities were just facades controlled by Baiense, who converted the funds into cash through check-cashing services. This created a shadow payroll system that evaded taxes by paying employees under the table. 

This arrangement resulted in a $2.8 million loss to the U.S. Treasury.

The scheme was uncovered following an incident in March 2021 when a worker at Baiense’s company died in a workplace accident. During an Occupational Safety and Health Administration investigation, Baiense testified under oath that the deceased was not employed by Contract Framing Builders but rather by a subcontractor named JBV. 

However, federal prosecutors later revealed that coworkers had never heard of JBV, implicating  Baiense's testimony was fabricated to evade accountability for workplace safety violations. 

Consequences

In April 2024, Baiense pleaded guilty to multiple charges, including conspiracy to defraud the United States, failure to pay taxes, and making false statements. Last month, U.S. Senior District Court Judge William G. Young handed down the prison sentence, one year of supervised release, and a restitution order totaling $2,824,577.45. 

“This is not a case where a misguided individual buried his head in the sand,” prosecutors argued. “This is a case of flagrant dishonesty.”

According to OSHA Acting Regional Administrator Jeffrey Erskine, Baiense’s actions went beyond tax fraud and put employees at significant risk. 

“When employers make false statements to OSHA investigators to cover up unsafe practices, they leave employees exposed to workplace injuries and deaths,” Erskine stated and credited the efforts of investigative partners who worked to bring Baiense to justice.

Baiense’s defense painted a different picture, portraying him as a man overwhelmed by poor judgment and misplaced trust. His attorneys argued that he had relied heavily on a business partner, who fled to Brazil during the investigation, and claimed the partner had assured him that the arrangements were legal. 

The defense also emphasized Baiense’s years of hard work as a laborer and his lack of intent to enrich himself lavishly.

Still, the court saw otherwise, emphasizing the scheme’s scope and the blatant disregard for legal obligations that warranted incarceration. “This is not just about taxes,” prosecutors said. “It’s about integrity.”

According to labor and legal experts, Baiense’s actions highlight a deeper issue within the construction industry: the temptation to misclassify employees and bypass tax laws to gain a competitive edge. Such practices undermine fair competition and leave workers vulnerable without the protections and benefits they deserve.

Takeaway

The message is clear for the construction industry: Compliance with tax laws and safety regulations isn’t just a moral argument but a legal requirement.