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San Juan judge dismisses tax evasion charges against contractors

San Juan Judge Glen Velázquez reportedly found insufficient evidence for charges against contractors Antonio Cruz-Batista and Evelyn Torres-García, who were accused of tax evasion by the Puerto Rico Treasury Department. The court’s decision came as officials from the Treasury and Justice departments, which collaborated in the probe, held a press conference on the case. The Justice Department has announced intentions to appeal.

Officials of both departments involved in the investigation into Cruz-Batista and Torres-García, owners of Modern Home’s Gallery Inc. and JLGA Construction LLC, alleged they failed to report about $1.4 million and owe approximately $1 million in taxes, fines and penalties.

In a statement after the judge’s decision, Treasury Secretary Francisco Parés-Alicea said: “We are greatly surprised by the decision issued today by the San Juan Court in the case that the Department of Justice presented against Antonio L. Cruz Batista and Evelyn Torres García for evasion and tax fraud. The Department of Treasury maintains that Cruz Batista and Torres García failed to fulfill their tax responsibilities, to the detriment of the public coffers and law-abiding citizens. I support the decision of the Department of Justice to appeal in this case and we hold that the investigation conducted by our experts from the Tax Intelligence and Fraud Area has sufficient evidence of violations to the Puerto Rico Internal Revenue Code.”

“Intentionally, deliberately and voluntarily, they did not include all their income on the Income Tax Returns, both personal and corporate, for the year 2020,” reads the complaint filed by prosecutor Ileana Martínez-Rosado of the Economic Crimes Division led by Rodney Ríos-Medina. “They also did not file the 2021 returns in order to evade and defeat the payment of taxes to the Treasury Department and thus defraud the government of Puerto Rico.”

The couple faced up to eight years in prison, with Cruz-Batista also having pending charges for construction fraud and embezzlement. 

“With these intentional omissions aimed solely at defeating tax provisions, both defendants personally benefited from approximately $1 million in tax payments,” Justice Secretary Domingo Emanuelli-Hernández had said before the judge’s ruling. “Those who defraud the Treasury Department defraud all citizens on the island and affect the economic development of Puerto Rico. Therefore, the Internal Revenue Code classifies this behavior as a crime and even imposes jail sentences. The Justice Department will seek to have them prosecuted under the law in court.”

“It is time to be held accountable,” Parés-Alicea had said before the judge’s decision.

However, after the ruling, the Treasury chief’s statement concluded with the following: “This result is regrettable, but it drives me even more to reiterate the call that I have made, both publicly and in writing to the Courts Administration, to coordinate training workshops on tax matters, so that judges are better guided when it comes to evaluating and adjudicating these cases. It is very sad that the efforts made by the experts of the Department of Treasury and the prosecutors of the Economic Crimes Division of the Department of Justice are sometimes frustrated by the decisions of some judges when evaluating and adjudicating the evidence.” 

He further added, “I refuse to be a Secretary of the Treasury who acts as a mere spectator in the face of social inequities promoted by the behaviors of people like these without consequences. I came to this agency to do things differently, and that is what people expect of me.”

Since 2021, the departments have launched a campaign against tax evasion, leading to more than a dozen filed cases with convictions or causes, Parés-Alicea said earlier Tuesday about “various fraud and evasion schemes, such as electronic transactions, influencers, salaried workers, automobile industry merchants, fraud with PAN [Spanish acronym for Nutritional Assistance Program] benefits, investment advisers, among others.” 

He had stressed that their “investigations are well-documented, and we are committed to continue working to ensure that everyone fulfills their tax obligations, without allowing such individuals to get away with it and to achieve a fair and equitable tax system.”

The investigation was prompted by a referral to the Treasury’s Tax Fraud Intelligence Area in December, and involved reviewing banking records and other available data, made possible due to “technological advances,” the government’s release read.

It was led by a special agent from the Tax Fraud Intelligence Area, with the involvement of Martínez-Rosado.

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