Miami Construction Company Owner Arrested for $1 Million Payroll Fraud and Workers’ Compensation Scheme

A Miami construction company owner finds himself facing serious criminal charges after state investigators uncovered an elaborate scheme designed to drastically reduce his business overhead by underreporting employee payroll. Authorities allege that the owner engaged in a deliberate deception that cheated an insurance carrier out of more than $100,000 in legitimate policy premiums, a practice that highlights ongoing vulnerabilities and enforcement efforts within the state’s commercial insurance sector.

Israel Carballo, who operated as the head of Carballo Group LLC, was taken into custody on November 5 following a thorough inquiry by the state Department of Financial Services. According to official court records, Carballo has formally entered a plea of not guilty to the charges against him and has since been released on bond while awaiting further judicial proceedings. The case underscores the aggressive tactics state regulators are deploying to crack down on commercial insurance fraud, which ultimately drives up operational costs for honest contractors and poses safety and financial risks for workers.

The investigation into Carballo Group LLC originated from a standard workers’ compensation insurance policy purchased in 2023. According to case details compiled by an investigator with the Florida Department of Financial Services, Carballo secured coverage for his business through NorGuard Insurance, a well-known subsidiary of Berkshire Hathaway. When applying for and securing the policy, Carballo reported a minimal workforce, representing his company’s operational scale as exceedingly small. By doing so, he managed to keep his financial obligation for the policy year to an annual premium of approximately $9,300.

However, the disparity between the reported figures and the actual scale of operations soon drew scrutiny. Investigators initiated a deeper dive into the company’s financial footprint by issuing subpoenas to various subcontractors and business entities that had transacted with Carballo Group LLC. The records returned from these subpoenas revealed a starkly different reality from what had been presented to the insurer. According to the arrest affidavit, the documentation proved that Carballo Group had actually disbursed approximately $1,074,000 in payments to workers over the course of the policy period.

Further probing by the Department of Financial Services investigator uncovered the operational mechanism behind the concealment. The investigation revealed that Carballo had routinely utilized check-cashing services to convert corporate funds into currency, a practice that investigators presume was executed to pay workers in cash and deliberately avoid leaving a traditional banking paper trail that would accurately reflect the true size of the payroll. By keeping the vast majority of his workforce off the official reported books, Carballo was able to maintain his artificially deflated insurance rates.

The financial impact of the alleged deception was substantial. Had Carballo accurately and transparently reported his company’s true payroll figures to NorGuard Insurance, the correct annual premium for the coverage would have amounted to $109,863, rather than the $9,300 he paid. The difference represents a shortfall of over $100,000 in unpaid premiums, directly harming the insurer and undermining the regulatory framework that ensures all businesses contribute fairly to the workers’ compensation system.

As the legal process moves forward, questions surrounding Carballo’s financial standing have already emerged in court. Public records indicate that Carballo has claimed indigent status as the criminal case progresses. This designation could potentially qualify him for a court-appointed attorney or a public defender to represent him against the felony charges of theft and workers’ compensation fraud.

Corporate records maintained by the Florida Secretary of State provide additional context regarding the short-lived existence of Carballo’s business entity. The documents show that Carballo Group was officially registered as a limited liability corporation in 2023, aligning with the timeframe when the fraudulent insurance policy was secured. However, the corporate entity’s lifespan was brief; the state agency ultimately dissolved the company after Carballo failed to file the mandatory annual report in 2025.