New York construction owner, employees indicted over alleged tax and wire fraud schemes

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NY construction fraud indictment

Highlights

Arthur Nelson and associates allegedly failed to withhold federal employment taxes on at least $5 million in unreported wages from April 2017 through May 2024.
Prosecutors claim Nelson underreported business gross receipts by approximately $13 million and submitted false financial documents to obtain loans and credit from July 2019 to March 2025.
Defendants face a range of charges including conspiracy, tax evasion, and wire fraud, with potential prison sentences of up to 20 years if convicted.

Charges detail alleged payroll and tax scheme

As reported by U.S. Department of Justice, Arthur Nelson of Staten Island, New York, and Sunny Isles Beach, Florida, Joseph Free of Staten Island, Paul Vasquez of Englishtown, New Jersey, and Ulysses Jude Devocion of Queens County, New York, are charged with offenses including conspiracy to defraud the IRS, tax evasion, failure to withhold and pay employment taxes, false tax return-related counts, wire fraud conspiracy, foreign bank account reporting violations and obstruction of justice.

Prosecutors allege Nelson owned and operated several construction-related businesses, including MTB AMG Inc. and PAL AMG Inc., which installed glass on commercial properties, MTB Metal Fabricators Inc., which provided manufacturing services, and Wired NYC LLC, which provided electrical installation services. The companies were based in Brooklyn until March 2022, when they relocated to New Jersey.

According to the indictment, from April 2017 through May 2024 the defendants allegedly caused workers to receive weekly wages without federal employment tax withholdings, with unreported wages totaling at least about $5 million. Prosecutors also allege the group falsely classified personal expenses as business expenses, filed or caused false federal returns to be filed, issued false W-2 forms and that Nelson underreported business gross receipts by about $13 million.

Potential penalties and business impact

Prosecutors further allege that from July 2019 through March 2025, Nelson, Devocion and Vasquez submitted false financial documents concerning Nelson and his companies to obtain money or property they were not entitled to receive, including loans, mortgages, lines of credit, credit cards and surety bonding contracts. The indictment says Free served as a construction foreman from March 2017 to about 2022, Vasquez was senior director of operations until about 2025 and Devocion worked as an accountant and office manager between about 2021 and 2023.

Nelson faces counts including conspiracy to defraud the United States, six counts tied to employment tax withholding failures, tax evasion, wire fraud conspiracy and FBAR-related charges. Free, Vasquez and Devocion each face multiple counts linked to the alleged tax and financial schemes, with Devocion also charged with obstruction of justice related to grand jury testimony.

If convicted, the defendants face maximum prison terms ranging from one year for willful failure to file a tax return to 20 years for wire fraud conspiracy and obstruction of justice. IRS Criminal Investigation is investigating the case, and Justice Department trial attorneys Richard Kelley and Michael C. Vasiliadis are prosecuting it; the department says the indictment is an allegation and the defendants are presumed innocent unless proven guilty in court.

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