Florida's Chief Financial Officer Jeff Atwater announced the arrests of six in Central Florida tied to an elaborate Workers' Compensation insurance fraud scheme last week.
|According to a release from the office of the CFO, an investigation led by the Department of Financial Services' Division of Insurance Fraud uncovered a large-scale premium fraud scheme in which the six individuals created multiple shell corporations in order to systematically conceal payroll amounts for the purpose of obtaining low-cost Workers' Comp policies. The investigators say that beginning in September 2012, the following were opened and operated as shell companies:
|- Alfa Construction
- Burgos Construction
- Ginel Construction
- Rejevaz Services Inc.
- PHH Construction.
Shell companies are owned by individuals—or "straw owners"—who, for a fee, agree to serve as the legal owner of a business because they have a clean criminal record. The businesses are instead run by organizers who direct the day-to-day activities and operations of the illegal activities.
|According to Atwater's office, members of this particular fraud network secured low-cost Workers' Comp policies by grossly deflating accurate payroll amounts. Those amounts were concealed by using check cashing stores, which circumvented proper bookkeeping measures.
After securing certificates of insurance, the organizers would "rent" the certificates to work crews for a fee. Because the policies were obtained fraudulently, employees were not covered and therefore were left vulnerable to high medical costs in the event of an on-the-job injury. The fraud organizers would print and provide fake business cards to these work crews and instructed them to present them to Workers' Comp compliance investigators during routine compliance checks. This cycle would continue until an insurance policy expired or was cancelled, and then organizers would open another shell company under a different name and begin the process again. The arrested individuals were booked on Organized Scheme to Defraud charges in their respective jurisdictions— either Hillsborough or Orange County—and if convicted, face a maximum possible sentence of 15 to 30 years in prison. Attorney General Pam Bondi's Office of the Statewide Prosecutor in Hillsborough County assisted in the investigation and is handling the prosecution of these cases. Atwater's office says it expects to make additional arrests connected to the ring.Want to continue reading?
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