Two Hialeah construction execs sentenced for defrauding low-income housing program

Sentencing comes amid an industry-wide crackdown on government abuse of low-income housing tax credits

May.May 30, 2019 05:30 PM
Two Hialeah construction executives were sentenced for defrauding the low-income housing tax credit

Two Hialeah construction executives were sentenced for defrauding the low-income housing program

UPDATED May 31, 11:25 a.m.: Two Hialeah construction executives were sentenced by a federal judge after being convicted of hiding people on their payrolls and defrauding the low-income housing program.

Aaron Construction Group President Javier Estepa of Davie was sentenced to 51 months in prison, while Vice President Diego Alejandro Estepa Vasquez of Boca Raton was sentenced to 41 months in prison.

The sentencing comes about a year after the Justice Department brought charges against the two executives. In February, they were each found guilty of one count of conspiracy to commit wire fraud and three counts of wire fraud.

Beginning in 2014, Estepa and Estepa Vasquez started falsifying information to Miami-Dade Public Housing and Community Development (PHCD) in order to get low-income housing projects, according to the Justice Department.

The two executives claimed that there would be no subcontractors working on the project and that each worker would get paid overtime. As a result, Aaron Construction was able to get $3.9 million in government contracts.

But the group hired subcontractors and hid them on their payroll. The executives then submitted false payroll records to the Miami-Dade agency, and also failed to pay their workers overtime or the appropriate wages, according to the Justice Department.

The judge ordered Estepa and Estepa Vasquez to repay the $1.7 million that they profited from the scheme.

A lawyer representing Estepa, as well as Estepa Vasquez’s attorney, disputed the $1.7 million. Instead, they said the value of the loss should be about $34,000.

“There was a good faith legitimate dispute about the method used under the guidelines to calculate loss,” said Neil Taylor of the law firm Neil G. Taylor, who represented Estepa.

The South Florida Business Journal first reported the sentencing. It comes amid heightened scrutiny into the abuse and fraud of low-income housing tax credit programs in South Florida and throughout the country.

“I think that it certainly puts the industry on notice,” said Susy Ribero-Ayala, who represented Estepa Vasquez. “I suspect there is going to be a lot more prosecutions down the road for those working on government projects.”

In August, Bloomberg reported Wells Fargo was being investigated by the Department of Justice for allegedly colluding with affordable housing developers nationwide to drive down the prices of low-income tax credits — potentially defrauding hundreds of millions of dollars from the federal program.

In 2016, former Carlisle Development Group executives were convicted of stealing $34 million in subsidies by inflating construction costs for more than a dozen affordable housing developments in Miami-Dade County.

In another case, Pinnacle Housing Group principals settled with federal prosecutors for $5.2 million after the government accused them of inflating costs for low-income housing projects.

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