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A Portland-based contractor has received a prison sentence for his involvement in a geared to avoid payroll and income tax payments for his employees’ wages.

Melesio Gomez-Rivera, owner of and operator of Novatos Construction, a residential construction company, was sentenced to 30 months in federal prison and three years of supervised release. In addition, he has been ordered to pay restitution of $29.9 million to the Internal Revenue Service.

Gomez-Rivera, along with four other construction company owners, conspired with David A. Katz, the operator of Check Cash Pacific, a check-cashing business with locations in both the Portland area and Vancouver, Washington, according to court documents. Their aim was to defraud the U.S. government by facilitating off-the-books cash wage payments to construction workers, the documents state.

The other individuals charged with conspiring to defraud the U.S. government include Martin Elizondo, associated with Edgewood Construction LLC and Power Construction LLC; Jorge Peraza, operator of Presto Homes; Jose Altamirano Sr., operator of L&L Bendormex LLC in Bend; and Natalie Graham, who worked in the office of All Purpose Construction LLC, a subcontracting company. Graham allegedly helped organize the under-the-table payments to construction companies’ employees.

According to court records, from January 2014 to December 2017, Gomez-Rivera, Elizondo, and Peraza evaded their construction companies’ employment tax obligations and aided other construction firms in similar tax evasion practices. They funneled millions of dollars in payroll checks through Katz’s check-cashing business, using the cash to make under-the-table payments to construction workers while filing false business and payroll tax returns.

Katz was charged with four additional counts of filing false currency transaction reports by

the U.S. Department of Treasury’s Financial Crimes Enforcement Network.

In March, Gomez-Rivera pleaded guilty, while the others are currently awaiting a jury trial scheduled to commence on Dec. 5.

In total, Katz and his co-conspirators cashed approximately $192 million in payroll checks, resulting in a combined employment and individual income tax loss of $68 million, as stated in court records.

A federal grand jury in Portland returned a five-count indictment against the six alleged conspirators on Dec. 2, 2021, following an investigation conducted by the IRS’ Criminal Investigation Division.