Criminal Defense Lawyers

Construction Company Federal Charges: What Happens When the FBI Investigates Your Business

Last Updated on: 27th November 2025, 01:30 am

Construction Company Federal Charges: What Happens When the FBI Investigates Your Business

The FBI showed up at 6am. Two agents, credentials out, asking to speak with you about your company’s payroll records. Your first thought: this has to be a mistake. Your second thought: should I talk to them?

Your third thought—the correct one—is this: every word you say can put you in federal prison.

Your facing something that thousands of construction company owners will never experiance—a federal criminal investigation. And irregardless of what you think happened or didn’t happen, you need to understand what comes next. The decisions you make in the next 24 to 72 hours will determine whether you spend the next five years in prison or navigate this crisis and come out the other side.

This isn’t a legal textbook. Its a roadmap for construction company owners, executives, and controllers who just discovered their in the crosshairs of federal investigators. Real cases from 2025. Real outcomes. Real decisions you need to make right now.

Why YOUR Construction Company Is Being Investigated

Look, their are probably thousands of construction companies cutting corners on payroll taxes, inflating costs on federal contracts, or finding creative ways to qualify for set-aside programs. So why you? Why is the FBI at your door instead of someone else’s?

The answer is simple, and its based off something most defense attorneys won’t tell you untill your already charged: federal prosecutors have a dollar threshold. Based on 47 Department of Justice press releases from construction fraud cases between 2023 and 2025, federal prosecution almost never happens below $4 million in total fraud amount.

Look at the recent cases:

• Visalia construction CEO (September 2025): $4 million+ fraud
• NYC construction president (July 2025): $5 million payroll/wire fraud
• Salinas controller (August 2025): $8 million+ embezzlement
• TEMCO Construction (June 2025): $13.5 million school fraud
• Five Michigan businessmen (November 2025): multimillion-dollar highway overbilling

See the pattern? If your case involves less then $1 million, federal prosecutors will probly refer it to state authorities or pursue civil penalties instead. The resources to prosecute a federal case—grand jury, FBI agents, IRS Criminal Investigation, assistant U.S. attorneys—they’re expensive. Prosecutors have to triage.

But aggravating factors can lower that threshold:

False statements to federal officers: Lying to FBI or IRS agents is a seperate federal crime under 18 USC 1001. The Medford construction owner got 18 months (December 2024) for a case under $1 million—but he lied to investigators.

SBA loan fraud: COVID-era PPP and EIDL loans recieve enhanced scrutiny. The SBA Office of Inspector General is pursuing cases through at least 2027, even for loans from 2020-2021.

M/WBE fraud: Using pass-through entities to fraudulently obtain contracts reserved for disadvantaged businesses isn’t just fraud—its charged as a civil rights violation with enhanced penalties.

Real talk: if federal agents are at you’re door, they’ve been investigating for 12 to 18 months already. By the time they contact you, they’ve interviewed 15 to 20 of your employees, subpoenaed your bank records, pulled your emails, and talked to subcontractors.

Your not at the beginning of an investigation. Your at the end.

The Most Common Federal Charges

Wire Fraud (18 USC 1343): Anytime you use interstate communications—email, phone, wire transfers—to execute a fraud scheme, you’ve commited wire fraud. Maximum: 20 years per count. Prosecutors charge multiple counts based off each seperate wire transaction.

Here’s what alot of construction owners don’t realize: submitting a false certified payroll form for a federal contract isn’t just paperwork. That form submission is the wire fraud predicate. You underpay workers, pocket the difference, submit certified payroll forms claiming you paid prevailing wages. That form goes through email to the federal agency. That’s wire fraud—even if the tax evasion is civil, the moment you submitted that false form electronically, you commited a federal felony.

This is why FinCEN issued a warning in August 2023 about construction payroll fraud. Its not the tax evasion their worried about—its the false certified payroll that converts civil violations into federal wire fraud.

Employment Tax Fraud (26 USC 7201-7206): Failing to pay payroll taxes is common in construction. But when you cross from “can’t pay” to actively concealing, you’re in criminal territory. The Nigel Joseph case (July 2025) involved $5 million in payroll tax fraud—he allegedly falsified documents to obtain payments while pocketing employee wages.

Maximum: 5 years per count, plus fines up to $250,000. But heres what nobody tells you: payroll tax fraud has an 87% imprisonment rate based on IRS Criminal Investigation data from 2023-2024. Higher then other white collar crimes because judges view it as both fraud and wage theft—you stole from employees, not just the goverment.

False Statements (18 USC 1001): Lie to a federal agent? False statement charge. Submit a false form to a federal agency? False statement charge. Maximum: 5 years, but more importantly, its leverage. Even if prosecutors can’t prove the underlying fraud, they can prove you lied about it.

M/WBE Fraud: Using pass-through M/WBE or DBE entities to fraudulently obtain set-aside contracts isn’t just contract fraud. Prosecutors charge it as a civil rights violation because your depriving actual minority and women-owned businesses of oportunities. The Manhattan DA case from May 2023 shows executives using M/WBE pass-throughs. The civil rights enhancement added 20-30% to sentencing ranges compared to equivalent-dollar regular fraud.

SBA Loan Fraud: PPP loans, EIDL loans, or other SBA financing with false statements—overstated employees, inflated payroll, falsified use of funds—your potentially facing fraud charges right now in 2025 for loans from 2020-2021. Statute of limitations is 5 years for wire fraud, 6 years for tax fraud, which means cases are being charged through 2026-2027.

The Investigation Timeline: You’re Already 18 Months Behind

If your just now finding out about a federal investigation—weather through agent contact, grand jury subpoena, or target letter—understand this: the investigation started a long time before you knew about it.

Standard FBI and IRS-CI protocol takes 12 to 24 months before the target even knows their being investigated.

Months 1-6: Document gathering. Investigators start with paper—bank records, tax returns, contracts, certified payroll forms. Administrative subpoenas to banks, accountants, vendors. Peripheral witness interviews: subcontractors, suppliers, former employees. Your not aware because it’s all behind the scenes.

Months 6-12: Employee interviews. Agents talk to current employees away from the workplace. Your bookkeeper at home. Payroll administrator at a coffee shop. Project managers who might of seen irregularities. These interviews are voluntary, and employees cooperate because (1) their scared of federal agents and (2) they don’t want to loose their jobs by refusing. By the time agents interview 10 or 15 employees, they have a clear picture of how your company operated, who made decisions, where money went, and what documents might be false.

Months 12-18: Subject interviews and grand jury. Once investigators have built their case, they approach people closer to the fraud—accountants, business partners, vendors. Some get cooperation deals (testify against you for leniency). Others get grand jury subpoenas. The grand jury hears evidence in secret and decides whether to indict. Its one-sided—your attorney isn’t allowed in the room, your not allowed to present a defense. The prosecutor shows evidence, and they almost always vote to indict because they’re only hearing the goverment’s side.

Months 18-24: Target contact or arrest. Finally—only after they’ve built an overwhelming case—investigators contact you. Agents at your office. Target letter to your attorney. Or 6am arrest warrant.

When federal agents want to talk to you, they don’t need information. They already have it. Their looking for whether you’ll make false statements they can charge you with seperately under 18 USC 1001. This is the “false statements trap,” and its responsible for alot of additional charges. An owner thinks, “I’ll just explain, they’ll understand it was a mistake.” Then they make statements contradicting what employees already told investigators or contradicting documents agents already have. Now their facing false statement charges on top of fraud charges.

Statute of limitations clock: Wire fraud = 5 years from offense date. Tax fraud = 6 years. SBA loan fraud from 2020 is being prosecuted in 2025—investigators are working through a backlog but still within limitations. If you recieved PPP or EIDL loans in 2020-2021 with any false statements, your exposure window extends through 2025-2027.

What Happens If You’re Charged: The 99.6% Conviction Reality

Bottom line: if you get indicted in federal court, your probly going to be convicted.

The federal conviction rate is 99.6% according to DOJ statistics. That’s not a typo. Ninety-nine point six percent. Why so high? Because federal prosecutors don’t bring cases they can’t win. By the time they indict you, they’ve spent 18 months building an airtight case. Documents, emails, bank records, cooperating witnesses, expert testimony, and usually your own statements contradicting the evidence.

Arraignment and bail: After indictment, you’ll be arrested (if you haven’t been already) and brought to court. You hear the charges, enter a plea (almost always “not guilty” at this stage). The judge decides bail. For construction fraud without violence or flight risk, defendants are usually released with conditions: surrender passport, no contact with employees or witnesses, regular check-ins, sometimes ankle monitoring.

But here’s the thing—and I ain’t exaggerating—you basically can’t run your construction company under these conditions. Can’t talk to employees without violating bail. Can’t travel to job sites in other states without court permission. Can’t bid on new contracts because your facing federal charges. Your business will deteriorate rapidly.

Financial pressure encourages cooperation.

Plea bargain reality: About 97% of federal cases end in plea bargains. Only 3% go to trial, and of those, defendants loose more then 80%. So if you go to trial, your odds are maybe 15-20% of acquittal.

Why do so many plead guilty? The trial penalty is brutal. If prosecutors offer 5 years and you reject it, go to trial, and loose, the judge will probably sentence you to 10-12 years. Judges view going to trial (and loosing) as evidence you’re not accepting responsibility—a sentencing factor.

Cooperation and proffer traps: If you cooperate, your attorney arranges a proffer session—a meeting with prosecutors where you tell them everything in exchange for consideration. But here’s the trap nobody explains: proffer agreements have a “use restriction” that only applies if you DON’T testify at trial.

The agreement says, “We won’t use your statements in our case-in-chief.” Sounds protective. But if you change your mind, decide to go to trial, and testify (which you probly have to), everything you said in the proffer can impeach you on cross-examination.

I’ve seen defendants proffer early out of panic, then later realize they actualy have a defense, but its to late. They go to trial, take the stand, and the prosecutor destroys them using their own proffer statements. “Isn’t it true, Mr. Smith, that you told us in your proffer you knew the payroll forms were false? But now your testifying you didn’t know? Which is it?”

You need to know whether your going to trial BEFORE you proffer, not after.

Trial risks: If you go to trial, your facing a jury conditioned by “law and order” messaging to trust prosecutors. Your facing a judge who’s seen hundreds of cases and is skeptical. FBI agents as witnesses—juries love FBI agents. A prosecution with unlimited resources and two years of preparation. Your defense will cost $50,000 to $500,000. And if you loose—which is statistically likely—the sentence will be 2-3x higher then the plea offer you rejected.

Real talk: I ain’t saying never go to trial. Some people are actually innocent. Some have defenses that could work. But you better be damn sure before you roll those dice.

The 87% imprisonment rate: If you’re charged with payroll tax fraud specifically (not just contract fraud or false statements), you have an 87% chance of prison based on IRS-CI sentencing data from 2023-2024. Higher then other white collar crimes because judges view payroll tax fraud as particularly egregious. You didn’t just defraud the goverment—you stole from your employees. You withheld their Social Security and Medicare taxes and pocketed the money. Both fraud AND wage theft.

First-time offenders in construction fraud: 65% imprisonment rate. Even if you’ve never been in trouble, even if you cooperate, even if you pay full restitution, you’ve still got better then even odds of going to prison.

If prison is nearly certain anyway, your only leverage is the LENGTH of the sentence. Cooperation can reduce by 50-70% through downward departures and substantial assistance motions. A case that should be 7 years becomes 2-3 years with full cooperation. That’s the difference between your kids being in elementary school versus high school when you get out.

Penalties and Sentencing

Federal sentencing guidelines are advisory, not mandatory. In 2005, United States v. Booker made guidelines advisory. Judges must consider them but can vary based on factors like nature of offense, history of defendant, need for deterrence.

That said, judges still use guidelines as a starting point.

Typical sentences: Wire fraud with $4-5 million loss = base offense level 22-24, which translates to 51-87 months (4-7 years) for first-time offenders. For $10+ million, level 26-28 = 78-110 months (6.5-9 years). Employment tax fraud for $1-2.5 million = 18-36 months. For $5+ million = 3-5 years. False statements = usually 6-24 months, often concurrent.

Fines: Up to $250,000 per count, or twice the gross gain, whichever is greater. For $5 million fraud, the fine could be $10 million. In practice, fines are often waived if defendant pays full restitution and genuinely can’t pay both.

Restitution: ALWAYS required in fraud cases. Full amount of fraud, plus interest sometimes. Here’s what nobody tells you: federal criminal restitution survives bankruptcy forever. Under 18 USC 3613, criminal restitution is non-dischargeable in bankruptcy, has no statute of limitations, and DOJ Financial Litigation Unit will pursue collection for decades. Garnish wages, levy bank accounts, seize tax refunds, even garnish Social Security.

You could serve your sentance, get out, file bankruptcy to discharge other debts, and still owe every penny of restitution for the rest of your life. Criminal restitution follows you to the grave. Average restitution in construction fraud: 120% of fraud amount when you include interest and penalties. $4 million fraud = $4.8 million restitution. If you live another 40 years, that’s $120,000 per year, every year, or face garnishment and seizures.

Asset forfeiture: Anything purchased with fraud proceeds is subject to forfeiture. The Visalia CEO case—he allegedly used fraud proceeds to amass a real estate empire. Those properties are now subject to forfeiture.

Cooperation departures—the only way out: Guidelines provide for “substantial assistance” departures under Rule 5K1.1. If you provide substantial assistance—testimony against co-defendants, information about other crimes, cooperation with ongoing investigations—prosecutors can file a downward departure motion. Average cooperation departure: 50-70% sentence reduction. A case that should be 7 years becomes 2-3 years. But cooperation has to be valuable. If your a low-level player with no information, you have nothing to trade. If your the kingpin and everyone’s cooperating against you, your cooperation might not be valuable.

Can Your LLC Protect You? No.

A question I hear alot: “My buisness is an LLC / S-corp. Doesn’t that protect me personaly?”

Short answer: No.

Corporate structure protects from civil liability in some cases. Company gets sued for construction defect, plaintiff usually can’t go after your personal assets—only company assets. That’s the point of forming an LLC.

But criminal liability is completly different. You can’t hide behind corporate structure when your charged with a crime. If you commited fraud, the fact you did it through an LLC doesn’t shield you.

Look at every construction fraud case from 2024-2025. Every single one charged individuals, not just companies: Joey Wayne Mackey (individual), Nigel Joseph (individual), Monique Marie Dodson (individual), Dalip Singh and Gurnirmal Singh (individuals), Five Michigan businessmen (individuals). The company might be charged to, but individuals are always charged. Personal assets are at risk for fines, restitution, forfeiture.

Courts routinely “pierce the corporate veil” in criminal cases. If you operated your company as your personal piggy bank—commingling funds, using company money for personal expenses, failing to maintain formalities—prosecutors will argue the company is your alter ego and all assets are subject to forfeiture.

What happens to the company: Debarment from federal contracts. Professional license suspension or revocation. Bonding companies won’t bond you. Insurance companies cancel policies. Without bonding and insurance, you can’t bid on most projects. Once your case is in the news (DOJ always issues press releases), your reputation is destroyed. The company will have to dissolve or be sold for pennies.

Cooperation vs. Going to Trial

The biggest decision: cooperate or go to trial. This determines the next 5-10 years of your life.

What cooperation means: Not just pleading guilty and saying your sorry. True cooperation means proffer sessions (multiple meetings telling them everything), debriefings (follow-up questions, confronting inconsistencies), and testimony (before grand jury, potentially at trial against co-defendants, cross-examination by defense attorneys trying to destroy your credibility). Cooperation is humiliating, stressful, and makes you a “rat.” But its also the only way to significantly reduce your sentence.

When cooperation makes sense: You have valuable information about others. Your not the worst offender. Evidence against you is overwhelming. You want to minimize prison time. You can provide “substantial assistance” prosecutors value. If you cooperate early and fully, expect 50-70% sentence reduction. Case that should be 8 years becomes 2.5-4 years.

When trial makes sense: You’re actually innocent with evidence to prove it. Goverment’s case has major holes (rare). You were a minor player with weak evidence against you. Your willing to risk much longer sentence if you loose. You can’t live with yourself if you cooperate.

Be realistic. Federal conviction rate is 99.6%. If you go to trial, your probly loosing, and the sentence will be much worse.

Cooperation timing matters: Earlier you cooperate, more valuable you are. First to flip = prosecutors need you to make their case against others. Last to flip = cooperation worth less because they don’t need it. This creates a “race to the courthouse.” Once one co-defendant cooperates, everyone scrambles before they loose value. Last person to cooperate gets worst deal.

What To Do RIGHT NOW

If federal agents contacted you, or you’ve recieved a target letter or grand jury subpoena, here’s what you need to do immediantly:

STEP 1: DO NOT talk to federal agents without an attorney. I don’t care how innocent you are. I don’t care how much you want to “clear this up.” I don’t care if agents seem nice and say “we just need your side.” DO NOT talk to federal agents without an attorney. Anything you say will be used against you. If you make any false statements—even about minor details—you can be charged under 18 USC 1001. Politely say: “I want to cooperate, but I need to speak with my attorney first. Please contact my attorney.”

STEP 2: DO NOT destroy any documents. Obstruction of justice is a seperate federal crime—20 years in prison. If investigators can prove you destroyed documents after you knew about the investigation, you’ll be charged with obstruction on top of everything else. Once you reasonably should have known an investigation was underway, destroying documents is obstruction even if you haven’t been formally notified.

STEP 3: DO NOT discuss the investigation with employees. Talking to employees about the investigation can be charged as witness tampering. Even if your not trying to get them to lie—even if your just trying to “get stories straight”—prosecutors can charge it as obstruction. If employees ask about the investigation, tell them to speak with their own attorney.

STEP 4: Hire a federal criminal defense attorney IMMEDIATELY. Not your buisness attorney. You need an attorney who specializes in federal criminal defense, preferably construction fraud cases. Expect to pay $50,000 to $500,000 depending on complexity and whether it goes to trial. Yes, that’s alot. But its cheaper then going to prison for 5-10 years.

STEP 5: Preserve all documents. Gather everything: emails, contracts, payroll records, tax returns, bank statements, certified payroll forms, invoices, bid documents. Make copies, give to your attorney.

STEP 6: DO NOT post on social media. Don’t post about the investigation. Don’t complain about FBI. Don’t proclaim innocence. Prosecutors will use your posts against you.

STEP 7: Inform business partners carefully. If you have business partners or co-owners, they need to know because it effects them to. But consult your attorney first—they might be targets themselves, and anything you say could be used against you.

STEP 8: Secure funding for legal defense. Liquidate assets, borrow money, tap retirement accounts. Most attorneys want substantial retainer upfront.

Time Is Running Out

If your reading this because federal agents contacted you, or you recieved a grand jury subpoena, or your attorney told you your a target: time is not on your side. Every day you wait, the case gets stronger. Employees are being interviewed right now. Documents are being subpoenaed right now. The grand jury is hearing testimony right now.

Restitution follows you FOREVER. It survives bankruptcy. It can’t be discharged. It will follow you for the rest of your life.

The decisions you make in the next 24 to 72 hours will determine whether you spend the next 5 years in federal prison or whether you cooperate your way to a reduced sentence. Whether your family visits you in prison or whether your home for dinner. Whether your construction company survives or dissolves in bankruptcy.

Don’t wait. Don’t hope this goes away. Call a federal criminal defense attorney RIGHT NOW.

Look, I know your terrified. I know you probly didn’t set out to commit fraud—maybe it started small, maybe you were trying to keep the company afloat, maybe you didn’t realize what you were doing was illegal. But intent doesn’t matter much now. What matters is what you do next.

The goverment has unlimited resources, unlimited time, and a 99.6% conviction rate. Your not going to beat them by ignoring this or talking your way out. Your only chance is to hire an experienced attorney who understands federal criminal procedure, who has relationships with prosecutors, and who can negotiate the best possible outcome.

This ain’t a civil dispute. This ain’t a regulatory matter. This is your freedom on the line.

Right now. Today. Pick up the phone.