Federal prosecutors allege that a Staten Island construction company owner hid about $13 million in business receipts and paid employees about $5 million in wages without withholding federal taxes, according to an indictment unsealed Oct. 26. Arthur Nelson, of Staten Island and Sunny Isles Beach, Florida, owned and ran a group of contractors known as the Nelson Companies. Three other people were charged alongside him.
The Justice Department said in a release on the case that the companies installed commercial glass, fabricated metal and did electrical work, operating from Brooklyn until March 2022 and from New Jersey afterward. An indictment is only an allegation, and each defendant is presumed innocent unless proven guilty in court.
What the indictment charges
Nelson faces one count of conspiracy to defraud the United States, six counts of willful failure to withhold and pay over employment taxes, two counts of tax evasion, one count of attempting to interfere with the administration of the tax laws, one count of conspiracy to commit wire fraud and two counts of willful failure to file foreign bank account reports. Most of those counts carry a maximum of five years in prison, and the wire fraud conspiracy count carries up to 20.
The other defendants are Joseph Free of Staten Island, a construction foreman; Paul Vasquez of Englishtown, New Jersey, a senior director of operations; and Ulysses Jude Devocion of Queens, an accountant and office manager. Assistant Attorney General Colin M. McDonald of the department’s National Fraud Enforcement Division announced the case, and IRS Criminal Investigation investigated it.
What pay with nothing withheld does to a worker’s record
The question reaches past this one company. Anyone who has been paid in cash or with nothing withheld, by any employer, has to ask whether those earnings ever reached Social Security’s books. The practical check is to review the earnings history in a my Social Security account and to pull the IRS wage and income records, then look for years that are blank or short.
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Social Security keeps score in credits. The agency says a worker can earn up to four credits a year, based on total wages and self-employment income, and in 2026 each credit takes $1,890 in covered earnings, so $7,560 buys the full four. Retirement benefits need 40 credits, which is roughly ten years of full credit years.
Prosecutors do not say what happened to the Social Security records of the Nelson Companies’ employees, and nothing in the release suggests any worker did anything wrong. They do allege that the defendants issued false W-2s, the year-end wage statement a worker receives. Wages that never reach the government’s records cannot be counted toward credits or toward the benefit formula built on career earnings.
Two dollar figures, two different measures
The $13 million is gross receipts. Prosecutors allege Nelson underreported his businesses’ gross receipts by approximately $13 million. The release gives no figure for the tax that went unpaid as a result, so the number should not be read as a tax loss.
The $5 million is wages. From April 2017 to May 2024, prosecutors say, employees were paid weekly wages with no federal employment taxes withheld, and the unreported wages came to at least approximately $5 million. That figure measures cash paid to workers, not the tax owed on it, and it is a separate number from the receipts.
The indictment also alleges that the defendants labeled personal expenses as business expenses and filed false employment, corporate and individual tax returns. A separate set of allegations covers July 2019 to March 2025, when Nelson, Devocion and Vasquez are accused of submitting false financial documents to obtain loans, mortgages, lines of credit, credit cards and surety bonding contracts.
How a worker checks the earnings history
A my Social Security account lets a worker review earnings for accuracy and get a Social Security Statement. The agency’s page does not explain how to fix an error, and points to its help section and local offices for that. A worker who spots a missing year should write down the employer’s name and the dates before calling.
The free official route on the tax side is the IRS. Through Get Transcript, taxpayers can view or download wage and income statements and tax account information from an IRS online account. Transcripts by mail go to the address on the latest return and arrive within 5 to 10 calendar days.
Older workers have the most to gain from checking now. A gap in the late-career years can lower the benefit that retirement checks are figured from, and a missing early year can be the difference in reaching 40 credits. Neither fix is possible for wages that no record shows, which is why the comparison between pay stubs, cash receipts and the official history matters.
Paid in cash and unsure it ever counted?
The case turns on money that skipped the paperwork, and the same blind spot costs retirees elsewhere: a thin earnings record is one leak among several. Unchecked tax moves, Medicare costs and house costs quietly drain a retirement the same way.
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This article was produced with AI assistance and edited for accuracy against the sources linked above.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
