The IRS Criminal Investigation unit has been paying calls on...

The IRS Criminal Investigation unit has been paying calls on Long Island businesses, the latest were co-operators of Medford cement businesses. Credit: James Carbone

The two joint operators of two Medford companies that manufactured and supplied concrete for home and commercial buildings on Long Island were arrested Tuesday by federal agents on tax evasion charges for failing to report $2.2 million they received in cash, according to officials.

Thomas Hess and Jose DaSilva, of Star Ready Mix and Star Ready Mix East, pleaded not guilty at arraignment in federal court to an indictment charging them with conspiracy to defraud the United States.

The arrests were the latest in a crackdown by agents of the U.S. Criminal Investigation Division of the Internal Revenue Service on tax evasion by contractors failing to pay taxes on building projects on Long Island, according to officials.

Most of the previous arrests have involved contractors who failed to pay payroll taxes on workers or paid employees in cash off the books, which was also unreported. The arrest of Hess and DaSilva was an outgrowth of those investigations, according to sources familiar with the case.

According to the indictment, the $2.2 million that was unreported was paid in cash to Hess and DaSilva by an unidentified customer of their companies. The unidentified customer was a builder of foundations, sidewalks and curbs for houses and commercial buildings, the indictment said.

Hess and DaSilva demanded and received the cash for some of their concrete deliveries between 2002 and 2007, the indictment said. While the Medford companies have a computerized system that was supposed to record all concrete sales, Hess and DaSilva had an unidentified employee responsible for record keeping omit some sales made to the foundation-construction company, the indictment said.

As part of their scheme, Hess and DaSilva also kicked back an unspecified portion of the $2.2 million to a third party, who was also not identified, the indictment said.

Asked whether the unidentified people in the indictment were or will be charged with any crimes, sources said the investigation was continuing.

The attorney for Hess and DaSilva, Joseph Ryan of Melville, said his clients look forward to resolving the situation in their favor. U.S. Eastern District spokesman Robert Nardoza declined to comment. U.S. Magistrate William Wall released Hess and DaSilva on $50,000 bail, pending future hearings.

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