Archive for Wednesday, June 27, 2007

Developer pleads guilty to tax charges for illegal workers

June 27, 2007

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— A developer of luxury lake condominiums pleaded guilty Tuesday to not paying taxes on his construction workers, including some who were illegal immigrants.

But under a plea agreement, developer Michael Schlup could avoid prison if he pays all of his back taxes and penalties before his scheduled Oct. 17 sentencing date.

Attorney General Jay Nixon contends Schlup used as many as 30 undocumented workers while building the Plaza Gardens on the Lake condominium complex near Sunrise Beach on the Lake of the Ozarks, a popular Midwest tourist destination. Nixon's office said Schlup pleaded guilty to 14 charges of failing to withhold or submit payroll taxes to the state.

"This prosecution and the plea that resulted from it should send a strong message that we won't tolerate this type of conduct, motivated by greed, that allows unscrupulous employers to gain an advantage over those businesses that play by the rules," Nixon said in a written statement.

Schlup's attorney did not return a telephone call Tuesday.

The plea agreement recommends that Schlup be sentenced to five years in prison on each count, to be served concurrently, with the prison term suspended entirely if he pays all state and federal employment taxes for a period covering September 2003 through March 2005. The agreement does not list a total amount of taxes due.

The plea arrangement also calls for Schlup to pay fines totaling $140,000, plus costs of $24,873 to the state and Camden County prosecutor's office. It also would bar Schlup from conducting business in Missouri.

Nixon announced the charges against Schlup, listed as a resident of Leawood, Kan., in April 2006 and said he began investigating after reports of one worker's death and several injuries at the Plaza Gardens construction site. The charges alleged Schlup paid workers about $8 an hour in cash for working about 70 hours a week.

Employee Apolinar Sandoval was killed March 23, 2005, and co-worker Hector Torres was injured when they fell four stories from a platform at Plaza Gardens.

In an April 2006 decision awarding worker's compensation to Sandoval's undetermined beneficiaries, Administrative Law Judge Paula A. McKeon said Schlup Investments Inc. required no employment applications, Social Security cards or legal immigration cards for its workers and did not obtain their addresses, telephone numbers or information about their dependents.

The administrative judge also said Schlup failed to withhold taxes from their pay, did not maintain records of what hours they worked and paid employees in cash.

"There is no dispute as to the lack of formalities of alleged employment with Schlup Investments Inc.," McKeon wrote. But "Missouri law does not require an express contract, either written or verbal, to establish the employee-employer relationship."

The Columbia Missourian's publication Adelante reported last month that the Department of Labor and Industrial Relations ordered Schlup to pay about $682,000 in worker's compensation to Torres and Aaron Medina, both of whom were undocumented workers employed by Schlup.

Medina, of Queretaro, Mexico, fell two stories in February 2005 while building archways at the Plaza Gardens complex, hurting his back, neck and head and remaining in a coma for 30 days, the publication reported.

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