Operating Engineers Local 139: Statement by President and Business Manager Terrance McGowan on the conviction of Gustavo Reyes

“Labor brokers who pay construction workers in cash (often less than what they agreed to pay), fail to pay federal and state taxes, fail to remit unemployment insurance payments, and fail to claim all employees on their worker’s compensation insurance policy are a drain on all law-abiding taxpayers and have seriously eroded the Wisconsin construction industry. We call this form of worker exploitation, payroll fraud. But worker exploitation by unscrupulous contractors took a hit on August 17, 2023, when Gustavo Reyes—a construction labor broker that operates several drywall entities—was convicted of federal tax evasion. I thank U.S. Attorney Timothy O’Shea for pursuing criminal charges against someone who commits payroll fraud, I sincerely hope that Wisconsin prosecutors follow the U.S. Attorney’s lead and vigorously pursue employers that engage in payroll fraud. These are not victimless crimes. Workers are exploited by being underpaid and deprived of basic employee benefits. Taxpayers foot the bill when tax fraud occurs. And honest employers pay more in unemployment insurance taxes and workers’ compensation premiums when others cheat the system. Criminal prosecution is likely the only deterrent that will curb payroll fraud in the construction industry.”