Florida Officials Make Arrests in Big Workers’ Comp Fraud Scam That Used Shell Companies
Florida workers’ compensation department CFO, Jeff Atwater, announced that 6 Florida residents have been arrested so far after the agency discovered the scheme which started back to 2012. The Florida insurance fraud division investigated the individuals involved and found that they had set up various shell companies to hide payroll amounts so they could get reduced cost workers’ compensation coverage. It was reported that the scheme involved several shell corporations including PHH Construction, Ginel Construction, Burgos Construction, Rejevaz Services Inc and Alfa Construction. These companies were set up using a straw owner that gets paid to use their good name. These people have clean records so the Florida workers’ compensation department would think that they had legitimate businesses. The shell companies are then run by other individuals that setup the illegal scheme. In this scheme the shell companies largely under report payroll totals which allow them to received highly discounted workers’ compensation insurance policies. They then use check cashing businesses to hide their real payroll costs which allows them to use false bookkeeping records. Once these businesses had fake insurance policies, they would sell the policies to other companies. The tragic part of this illegal scheme is that workers think they have legal workers’ comp coverage but if they end up injured in the workplace they would soon find out that they had no insurance coverage and would have to pay for all their expensive medical expenses out of pocket. To make these companies appear real the scammers would print fake business cards and give them to the workers. Then when the Florida workers’ compensation inspectors came by to check the worksite the workers would show these business cards to them to hide the fact that they did not actually have the proper coverage. They could continue the scheme up to the point that the insurance policy ended. When this happened they would simply create another shell corporation using a fake name and start the process all over again. The Florida State Attorney General, which investigated the scam, said the suspects were arrested and booked into local jails. All people involved could face up to 30 years in state prison. The Florida Workers’ Compensation Attorneys at The Broderick Law Firm are following this story and will post updates as they happen.
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