DOING THE TIME OVER A 1099 — A Massachusetts contractor received a lenient jail term after defrauding the IRS by claiming that his employees were 1099 workers.
Kenneth Marston, 67, of Hanson, Massachusetts, has been sentenced to six months in prison, followed by 18 months of supervised release with the first six months on home detention, for a tax fraud scheme that avoided over $1 million in employment taxes. Marston pleaded guilty in October 2024 and was also ordered to pay $101,791 in restitution.
Marston owned and operated two businesses: Bowmar Steel Industries, a steel fabrication company, and Teleconstructors, a provider of cellular tower installation services. From 2015 to 2018, he willfully misclassified his employees as 1099 independent contractors. This allowed him to avoid withholding Social Security, Medicare, and income taxes on over $3.8 million in wages. His actions circumvented the responsibility of filing quarterly Employer’s Federal Tax Returns (Form 941) and resulted in significant financial losses to the IRS.
While Marston faced a potential maximum sentence of five years, U.S. District Judge Indira Talwani showed leniency, citing statutory guidelines and his cooperation. Despite his reduced sentence, the case has spotlighted critical issues within the wireless infrastructure industry.
Unfair practices undermine wireless installation professionals
The wireless contracting industry grapples with a recurring issue: legitimate contractors’ competitive disadvantage. To meet the rigorous standards demanded by carriers and regulatory bodies, professional wireless installation companies invest heavily in insurance, compliance, training, equipment, and management. These costs are necessary to ensure safety, quality, and adherence to federal laws.
However, companies like Teleconstructors exploit loopholes by misclassifying employees as independent contractors, often avoiding these expensive obligations. This enables them to undercut legitimate businesses on price, gaining an unfair edge in a fiercely competitive market. These practices harm the industry and threaten worker safety and project integrity.
Industry insiders have criticized major carriers for indirectly enabling these practices. By outsourcing work through turf management companies, carriers often insulate themselves from liability and accountability. While these management companies are aware of such schemes, their focus on cost-saving measures inadvertently perpetuates the problem.
The need for industry reform
Cases like Marston’s underscore the urgent need for stricter enforcement and oversight. The wireless industry is critical to maintaining and expanding the nation’s communications infrastructure. Yet, legitimate contractors disproportionately bear the financial burden of adhering to legal and safety standards.
“These schemes damage the industry’s reputation and harm companies striving to comply with federal regulations,” said an industry spokesperson. “Stronger collaboration between regulators, carriers, and contractors is essential to level the playing field.”
The wireless infrastructure sector continues to call for reforms that hold all players accountable, ensure fair competition, and safeguard the industry’s future.