Workers Comp Fraud & Money Laundering
Eight Florida contractors have been charged in a $70 million “cheat to compete” scheme involving workers compensation fraud and money laundering, Broward County Sheriff Al Lamberti and Florida Chief Financial Officer Jeff Atwater announced in a recent joint press conference.
The scheme allegedly involved shell companies, check cashing stores and millions of dollars, including $1 million in cash seized recently, according to Lamberti. The goal was simple: underbid law-abiding contractors in a struggling economy, the sheriff said.
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Ran Undeclared Payroll Through Check Cashing Outlets
The ringleader was allegedly Hugo Rodriguez, 36, of Coral Springs, who ran the Oto Group and funneled $70 million in undeclared payroll through check cashing outlets that ultimately provided cash to give workers in lieu of paychecks, according to investigators. Bond was set at $500,000 for Rodriguez. His attorney Joseph Bosco disputed the charges, claiming, “We’ve just begun our investigation.” Bosco said Rodriguez’s “dire” financial condition contradicted the government’s allegations. “His house is in foreclosure,” Bosco added.
However, one of the accused check-cashing outlets that Rodriguez used, K & N Food Corp. in Palm Beach County, has owners who are cooperating with the joint investigation, investigators said. Nilbala and Kanti Patelhave agreed to the immediate forfeiture of more than $490,000 in illicit proceeds, authorities reported.
Operation Dirty Money Has Netted $140 million
To date, the joint state-BSO investigation, coined “Operation Dirty Money,” has netted more than $140 million in fraudulent transactions tied to a dozen shell companies. The corruption has extended into cash payments to workers to avoid paying Social Security and other taxes, Lamberti noted.
Construction leaders accused of conspiring with alleged ringleader Rodriguez include Luis Figueroa Cruz, of LMF Construction Corp.; Villalvir Aquiles, of NAV Construction Inc.; and Carlos Pagan Rios, of Pagan Construction Inc. They all are charged with workers comp fraud, conspiracy to commit workers comp fraud and money laundering
Arrested on the same charges were Luis Santiago, LAS Construction Inc.; Henry Giron, Licold Construction Inc.; Aida Giron, Everalx Construction Inc.; and Eduan Santiago Rivera, E. South Construction Inc.
Author Michael B. Stack, CPA, Director of Operations, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher. www.reduceyourworkerscomp.com. Contact: [email protected].
WORKERS COMP MANAGEMENT MANUAL: www.WCManual.com
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers comp issues.
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