Business Owner Sentenced for Tax Fraud Scheme

A federal court sentenced a Massachusetts man to 13 months in prison for avoiding over $1 million in payroll taxes.

Updated on Oct. 1, 2026 in Financial Crime

Business Owner Sentenced for Tax Fraud Scheme

Live Poll

Do you believe current prison sentences for business owners who commit tax evasion are sufficient?

Henry Lam, the owner of HL Temporary Services, was sentenced to 13 months in prison after pleading guilty to mail fraud and failure to pay taxes. He was ordered to pay $1.65 million in restitution following his scheme to hide payroll expenses.

Why it matters

The case highlights the severe legal consequences for business owners who engage in tax evasion and insurance fraud. By utilizing cash-based payroll, Lam avoided critical tax obligations and lower premiums.

Henry Lam received a 13-month prison sentence for his crimes. He must pay $1.65 million in restitution for his role in the payroll tax evasion scheme.

The players

Henry Lam

He was the owner and operator of HL Temporary Services who pleaded guilty to federal tax and fraud charges.

HL Temporary Services

This was the temporary staffing agency based in Lowell that served the Massachusetts region.

The details

Between 2016 and 2023, Lam operated HL Temporary Services and systematically hid over $6 million in payroll by paying employees in cash. He also used falsified data to illegally lower workers' compensation insurance premiums.

Lam operated the business between 2016 and 2023.
The defendant was arrested in July 2025.
Lam pleaded guilty in May 2026.
The federal court sentenced Lam on September 30, 2026.

Legal Context

This case reflects broader federal efforts to prosecute employers who violate the Internal Revenue Code payroll tax requirements. Such enforcement actions are common in business sectors where cash-based operations are used to conceal revenue and minimize legal liabilities.

Residents and local business owners should be aware that the federal government is actively monitoring payroll practices for tax evasion. This case serves as a warning regarding the importance of transparency in business accounting and compliance.

The takeaway

Business owners are reminded that using cash to bypass payroll systems leaves a significant audit trail that leads to severe legal penalties. Proper accounting practices are the only way to avoid the criminal liability associated with tax evasion.