J&J Drywall Inc., of Woonsocket, Rhode Island, pleaded guilty to cheating the Internal Revenue Service out of more than $2.8 million by paying workers in cash and not withholding appropriate taxes, federal prosecutors said.

In a piece that appeared in The Providence Journal, as reported by Michael McDermott, Jesus Jose Mendez, co-owner of the drywall contractor, and his business partner used check-cashing businesses to secure more than 600 business receipt checks—totaling more than $16 million, prosecutors reported.

The contractors traveled to construction sites carrying backpacks full of cash, which they left to be used to pay their employees. Additionally, the two failed to make required unemployment insurance contributions, authorities said.

With the exception of a small number of employees placed on an official payroll and paid by check, income and employment taxes were not withheld or paid to the IRS, and unemployment contributions were not made, prosecutors said.

Mendez pleaded guilty to wire fraud and conspiracy to defraud the country. His business partner was last reported a fugitive.