Then there's the little issue of doing something illegal and immoral which will get you in trouble with the IRS and Social Security. You will end up paying taxes, interest and penalties and kicked out of the Social Security program. Social Security is likely to get an order to make you pay back, with interest, your SS benefits. All this may be a little difficult while you are doing time in jail.

I sincerely hope what the employer meant is that you would be an independent contractor making you liable to pay taxes on monies earned. If not, I would report the employer ASAP.