John Drago, the owner of six check cashing businesses in Long Island, pleaded guilty to payroll tax evasion and illegally structuring financial transactions.
Financial institutions are required to file a Currency Transaction Report (CTR) for each transaction of $10,000 or more, this includes when multiple checks totaling $10,000 or more are cashed in a single day. From 2010 to 2013 Drago instructed his employees to cash multiple checks in excess of $10,000 per day for certain customers without filing the CTR. He also instructed employees to tell customers who wanted to cash individual checks of $10,000 or more to return with multiple checks in smaller amounts.
As a result of Drago’s scheme, more than 9.5 million dollars in check cashing transactions were concealed from the IRS.
Between 2012 and 2013 Drago also paid overtime wages and commissions to his employees in cash, and did not report them to the IRS.
As part of his plea Drago agreed to forfeit his check cashing licenses and is barred from applying for new licenses. He faces up to 10 years in prison, agreed to forfeit $253,000 and to pay restitution to the IRS in the amount of $593,000.