The former owners of a temporary employment agency in Stoughton were convicted on Wednesday of paying more than $25 million in unreported cash to their employees in order to avoid paying $7 million in taxes and more in workers compensation insurance premiums.
Michael Powers and John Mahan were charged with one count of conspiracy to defraud the Internal Revenue Service and their workers compensation insurers, one count of mail fraud and two counts of false tax return.
The men owned and operated Commonwealth Temporary Services, Inc. from 2000 to 2004 and paid many of their employees in cash to evade employment taxes and insurance premiums associated with having people on pay roll.
The amount employers have to pay is largely dependant on how big the pay roll is, so Powers and Mahan lied about their number of employees and paid them in cash so they would be undetected.
Both men face up to 20 years in prison, followed by three years supervised release and a $250,000 fine on the mail fraud charge; a maximum of five years in prison with three years supervised release and a $250,000 fine on the conspiracy charge; and up to three years in prison with one year of supervised release and a $250,000 fine on the tax fraud charges.
Powers is expected to be sentenced on October 26 and Mahan on November 3