From the NY Post:
Investigators for New York City and State are zeroing in on corporate cheats that have allegedly been using storefront check-cashing operations to launder money and evade possibly hundreds of millions of dollars in taxes, according to very reliable sources.
The scam goes something like this, according to Mazzilli and the sources involved in the probe:
Let's say a bowling alley in the city needs a contractor to repair some concrete work.
The management of the bowling alley would, obviously, pay a contractor with a check.
In the illegal way of doing it, that check would then be brought by the contractor to a check-cashing operation -- rather than a regular bank.
The contractor would, of course, be given cash minus a fee of perhaps 2 percent to 5 percent of the total amount.
The check-cashing firm, ultimately, would deposit the check in its own account at a bank.
Investigators believe that contractors are routing these payments through check-cashing firms in order to avoid having the money show up as income, and thus skipping the payment of taxes.
Plus, doing it this way gives the contractor better cash flow for things like paying undocumented workers and, perhaps, making under-the-table payments to others.
Photo from the Daily News