DOJ: Lowell Man Sentenced to Prison for Hiding More Than $6 Million in Payroll

• Lam avoided paying more than $1.5 million in payroll taxes by paying employees in cash.
• HL Temporary Services used false payroll numbers to obtain workers’ compensation insurance at lower premium rates.

Henry Lam, owner of HL Temporary Services in Lowell, was sentenced to 13 months in prison and two years of supervised release for payroll tax avoidance and workers’ compensation insurance fraud. Lam was also ordered to pay $1,652,573 in restitution after pleading guilty to failure to collect and pay over taxes and mail fraud.

Between 2016 and 2023, Lam cashed client checks at Massachusetts check cashing businesses and paid temporary employees primarily in cash, hiding over $6.2 million in payroll and avoiding more than $1.5 million in payroll taxes. He also used false payroll numbers to secure lower insurance premiums.

• $6.2 million hidden payroll
• $1.5 million avoided payroll taxes
• $1,652,573 court-ordered restitution

• Review HL Temporary Services’ payroll and insurance filings for false reporting and cash payments.
• Screen Massachusetts check cashing businesses for patterns of large check cashing by employment agencies.
• Monitor client companies in New England using HL Temporary Services for potential payroll tax avoidance typologies.

This case highlights the risks of payroll tax avoidance and insurance fraud through cash payments and false reporting. Compliance officers should be alert to employment agencies using check cashing businesses and underreporting payroll to evade taxes and insurance premiums. Such schemes can undermine regulatory oversight, facilitate money laundering, and expose financial institutions to legal and reputational risks if not properly detected and reported.