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Only on 2: Undercover video helps Indiana prosecutors nab construction companies accused of tax fraud

Undercover video helps Indiana prosecutors nab construction companies accused of tax fraud 02:05

CHICAGO (CBS) -- Only on 2:

Undercover video obtained by the CBS 2 Investigators helped prosecutors file tax fraud charges against two Indiana construction companies behind a massive project in LaPorte.

 But workers say they've been sounding the alarm on this company for years. CBS 2 Investigator Megan Hickey reports on new details about this investigation.

The carpenters union has records showing they've been submitting complaints about one of the companies for years. So why did it take undercover video to hold them responsible?

According to the indictment, undercover workers for Pro Paint & Finish and Drywall Hanging Services were misclassified as independent contractors. Groups of employees were also paid by a single check without any required withholding, such as payroll taxes. The LaPorte County Prosecutor filed charges this week against both companies and their owners.

But the Indiana/Kentucky/Ohio Regional Council of Carpenters tells me they've been submitting complaints to a state-run tip line about one of the companies since 2018. They have the records to prove it.

So, why didn't anyone listen?

"I'm very concerned about it, because that tip line is there, specifically for this purpose. And it was established by the legislature to do this."

Indiana State Senator Mike Bohacek tried unsuccessfully in 2021 to pass legislation to create more oversight to try to curb this type of alleged tax fraud.

It would have also created a task force to support the tip line. Now that charges have been filed in his district, Bohacek said he's going to file a new version because there's potentially millions in taxpayer money at stake.

"To see a contractor take advantage of this, take advantage of the government, take advantage of the municipality and, quite frankly, take advantage of the of the of the worker is, quite frankly, makes me beyond angry," Bohacek said.

CBS 2 reached out to several state departments to find out if the complaints about Pro Paint & Finish were received. And to ask if this tip line is being actively monitored. We're still waiting on a response.

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