Workers' Comp Fraud Blotter (11/10/2011) – Temporary Employment Business Avoided Millions in Taxes and Premiums By Paying Employees Cash Under-the-Table

Workers' Comp Fraud Blotter (11/10/2011) – Temporary Employment Business Avoided Millions in Taxes and Premiums By Paying Employees Cash Under-the-Table

Each week we'll be surveying what the media, state agencies, insurance companies, and others report in terms of workers' comp fraud. Just like a police blotter, our workers' comp fraud blotter lists recent arrests, charges, convictions and investigations.


Workers' Comp Fraud Blotter - November 10, 2011

Former Owner Of Temporary Employment Agency Sentenced For Under-The-Table Scheme (MA) - John Mahan, a former owner of Commonwealth Temporary Services, Inc., has been sentenced to six years and four months in prison for his role in running a $30 million under-the-table payroll scheme. The scheme avoided more than $9 million in federal and state payroll taxes and workers' compensation insurance premiums. Mahan under-reported the payroll of Commonwealth Temporary Services, which supplied hundreds of temporary laborers to businesses throughout Eastern Massachusetts, by paying more than $30 million of the company's payroll in cash.   Read more

Evidence of Embezzlement From Native American Tribe Admissible For Workers' Comp Conviction (LA) - The United States Court of Appeals for the Fifth Circuit has affirmed the conviction of Sherrie D. Wood, also known as Evening Star, on four counts of making fraudulent statements to obtain federal workers' compensation benefits. Wood unsuccessfully argued that the admission of evidence suggesting that she reimbursed herself without authorization for expenses incurred as the result of her involvement with the Four Winds Tribe, a Native American organization, or that she embezzled tribal funds, was erroneous because it was irrelevant, inadmissible, and highly prejudicial.   Read more

Owners Of Gardening And Tree-Trimming Businesses Sentenced To Five Years In Prison For Committing $2 Million In Fraud (CA) - James Joseph Klinger and Dorothy Louise Klinger, who co-owned and operated Modern Tree Service, Inc. and Jamo's Gardening, have been convicted of workers' compensation fraud and tax evasion. They set up Jamo's Gardening with the express purpose of hiding Modern Tree Service employees' payroll by fraudulently classifying Jamo's Gardening as a landscape gardening business instead of a tree-trimming business, which allowed them to insure tree-trimmers as gardeners to substantially lower their insurance premiums.   Read more

Paramedic Charged With Self-Inflicted Gunshot Wound Receives Probation (FL) - Paramedic Brandon Richie has pled guilty to workers' compensation fraud charges that he shot himself at work and attempted to collect workers' compensation benefits. Richie had claimed that he was shot by a man wearing a lime-green jacket with NASCAR badges on it, but he later admitted that he shot himself.   Read more

Airline Cargo Employee Arrested For Workers' Compensation Fraud (CA) - Eric Hinkle has been charged with workers' compensation fraud and concealment of material facts regarding insurance benefits. Hinkle injured himself while loading and unloading aircraft for an airline and was awarded benefits. He is accused of lying to a claims examiner about lifting large, heavy items while moving his household, so that he could continue to receive his total temporary disability benefits.   Read more

Contractor Sales Rep Received Workers' Compensation Benefits While In Jail (OH) - Stacy Verhelle has pled guilty to receiving and cashing disability checks while he was working for three employers and also incarcerated in the Akron Oriana House. When he was not in jail, Verhelle was employed by Davis Family Roofing, Biltmore Exteriors, and Equity One Exteriors. Verhelle was sub-contracted by these companies to be a sales representative and estimator, securing jobs for the companies and receiving a percentage of the total value of each job.   Read more

Roofer Failed To Pay Workers' Compensation Premiums While Employees Filed Injury Claims (OH) - Ralph Gearhart, the owner of Ohio State Roofing, Inc., has pled no contest to operating his business for more than a decade after his workers' compensation coverage had lapsed for failure to pay premiums. Gearhart owed more than $205,000 in unpaid premium and penalties during this time period, while his employees were filing injury claims.   Read more

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