Not all is sunny for some in the Sunshine State.
Florida Chief Financial Officer Jeff Atwater recently announced six Central Florida insurance fraud arrests that breakdown an elaborate Central Florida workers compensation insurance fraud scheme.
An investigation led by the Department of Financial Services’ Division of Insurance Fraud revealed a large-scale premium fraud scheme in which these six individuals created multiple shell corporations in order to systematically conceal payroll amounts for the purposes of obtaining low-cost workers comp policies.
Investigators believe that beginning in September 2012, the following Central Florida businesses were opened and operated as shell companies: Alfa Construction, Burgos Construction, Ginel Construction, Rejevaz Services Inc., and PHH Construction.
Shell companies are owned by straw owners, or individuals who, for a fee, agree to serve as the legal owner of a business because they have a clean criminal record. These businesses, however, were alternatively run by organizers who directed the day-to-day activities and operations of the illegal activities.
By grossly deflating accurate payroll amounts, members of this fraud network fraudulently secured low cost workers comp insurance policies. Payroll amounts were concealed through the use of check cashing stores, which circumvented proper bookkeeping measures.
After securing certificates of insurance, organizers would ‘rent’ the certificates to work crews for a fee. Since the policies were obtained fraudulently, employees were not covered and therefore left vulnerable to high-dollar medical costs in the event of an on-the-job injury.
Fake Business Cards Part of the Ruse
To further their scheme, organizers would print and provide fake business cards to these work crews, who were instructed to present them to workers comp compliance investigators who routinely conduct compliance checks at job sites to ensure proper coverage is in place.
This cycle of fraud would continue until an insurance policy expired or was cancelled, at which time organizers would open another shell company under a different name and begin the process again.
The defendants were booked on Organized Scheme to de-fraud charges in their respective jurisdictions, either Hillsborough or Orange County, and if convicted, face a maximum possible sentence of 15–30 years in prison.
Additional arrests were expected.
Author Kori Shafer-Stack, Editor, Amaxx Risk Solutions, Inc. is an expert in post-injury response procedures and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. www.reduceyourworkerscomp.com. Contact: [email protected].
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