Hoovler links Tax Day to construction fraud in Orange County

Orange County District Attorney David Hoovler used Tax Day to frame construction fraud as theft, not paperwork, warning in Goshen that dishonest payroll schemes drain wages from workers, tax revenue from governments and jobs from law-abiding contractors.

Speaking before dozens of carpenters union members alongside Sheriff Paul Arteta and Assemblyman Karl Brabenec, Hoovler tied the issue to a broader enforcement push in Orange County. The district attorney’s office and the sheriff’s office created the countywide Joint White-Collar Crimes Task Force in March 2023, with a mandate that includes residential contractor fraud, wage theft, labor-law violations, public corruption, embezzlement and crimes against revenue. The unit operates out of the Orange County Emergency Services Center in Goshen.

Scott Smith, business manager for Carpenters Local 279, said the abuse often runs through shell companies, obscure bank accounts and check-cashing operations designed to dodge payroll rules. That kind of system, he said, can spread far beyond one bad actor, creating a hidden economy that cheats workers, undercuts legitimate businesses and leaves taxpayers footing the bill. Union officials have said construction tax fraud is not accidental and have tied it to billions of dollars in lost wages and taxes nationwide.

Federal authorities have warned about the same patterns. In August 2023, the Financial Crimes Enforcement Network and IRS Criminal Investigation said state and federal authorities lose hundreds of millions of dollars each year to payroll tax evasion and workers’ compensation fraud in the construction sector. Their notice said many schemes involve shell companies, fraudulent documents, banks and check-cashing businesses. The North Atlantic States Regional Council of Carpenters has put the broader nationwide loss at $10 billion a year in employment-related federal and state taxes and said an estimated 230,000 construction workers are illegally misclassified across the seven states where the union operates.

Hoovler’s office has kept a Labor Crime Tip Line in operation since March 2015 for reports of wage theft, unsafe working conditions, prevailing wage violations and workers’ compensation fraud. The number is (845) 291-2107, and callers can remain anonymous.

The warning landed in a county where construction remains a major economic driver. Orange County’s Office of Community Development administers federal housing and infrastructure money through HUD-funded CDBG and HOME programs, and the county recently sought applications for PY-2026 HOME projects for affordable rental housing and homeownership. In March, state officials announced $19.3 million in Mid-Hudson affordable housing grants, including $5.8 million for a 42-unit project in the Town of Crawford. In that kind of market, Hoovler said, payroll fraud does more than cheat one job site. It distorts bids, weakens public trust and takes money from the workers and taxpayers who are supposed to benefit from the work.