Workers' Comp Fraud Blotter (3/22/2012) – Making Shell Companies For Fraud and Getting Caught-CFO Turns on Crooked Boss

Workers' Comp Fraud Blotter (3/22/2012) – Making Shell Companies For Fraud and Getting Caught-CFO Turns on Crooked Boss

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 - March 22, 2012

Making Shell Companies For Fraud and Getting Caught-CFO Turns on Boss After Boss Has Him Arrested (IA) - Dinesh Sethi, the owner of DES Staffing Services, has been sentenced to 57 months of imprisonment for his fraudulent scheme to avoid paying $778,940.00 in workers' compensation premiums to Travelers and Liberty Mutual Insurance companies. Sethi directed the creation of two shell companies, Staffing Professionals and KDM Staffing, and transferred DES employees to those entities to avoid the larger workers' compensation premiums DES owed as a result of its accident and claims history. In addition, Sethi directed his Chief Financial Officer, Randy Stringer, to shift payroll from job classifications which had a high premium rate to job classifications which had a lower premium rate, such as clerical. After Sethi had Stringer arrested by the FBI on charges of embezzlement, String turned the tables and ratted out his boss's workers' compensation fraud scheme to the FBI and Liberty Mutual.   Read more

More Shells-Construction Company President Arrested For Payroll Falsification Fraud Scheme (FL) - Randall Morton Seltzer, the president of construction company Navarre Industries Inc., has been charged with multiple felony counts, including workers' compensation fraud and grand theft, for falsifying payroll information to avoid workers' compensation premiums. Seltzer has been accused of intentionally and systematically underreporting his corporation's true payroll to his insurance carrier, Guarantee Insurance Company, even after stop work orders had been issued against the company. Seltzer allegedly established a shell corporation under the name of Hip Roof & Valley Inc. to intentionally violate the stop work orders and continue operating his construction business illegally.   Read more

Who Would Have Thought It? Being "Fit as a Fiddle" May Send Construction Worker to Jail (MT) - Herbert George MacNeeley has been charged with theft for fraudulently receiving more than $30,000 in disability benefits while he was able to work. MacNeeley claimed that he was unable to work after he was injured while working at Oswood Construction Co. and began receiving benefits. While receiving benefits, he entered into a contract to remodel a café. He was caught after bragging that he was "fit as a fiddle" while working on the café remodeling.   Read more

State Workers' Comp Auditing Supervisor and Wife Charged With Taking Kickbacks From Employers (PA) - James McDonnell, an auditing supervisor with the State Workman's Insurance Fund, has been arrested and charged with soliciting and receiving bribes in exchange for favorable treatment of businesses insured through the Fund, and his wife, Michelle McDonnell, has been arrested and charged with criminal conspiracy. McDonnell and his wife are accused of receiving more than $80,000 through a scheme where he solicited and promised Pennsylvania business owners that were insured through the Fund that he could reduce their insurance premiums in exchange for kickback payments. The bribes were either paid directly to McDonnell in cash or by the solicited businesses putting his wife on the company payroll as a ghost employee.   Read more

Owner of Home Health Care Company Heading To Prison For Defrauding Federal Program For Nuclear Weapons Workers and Miners (CO) - Anthony Paul Breaux has been sentenced to prison for health care fraud and money laundering in connection with his efforts to defraud government funded health care programs meant to compensate nuclear weapons workers and uranium miners. Breaux owned Honor-Bound Healthcare Providers, which was in the business of providing home health care services to patients who were nuclear weapons workers or uranium miners, millers and transporters. Breaux double-billed for services that he had already been paid for and also submitted invoices for services that were never provided.   Read more

Painting Contractor Charged With Failing To Have Insurance (CA) - Francisco Barajas-Castellanos has been charged with one count of conducting business as an uninsured employer. During a routine compliance check of contractors, Barajas-Castellanos and an employee were observed preparing the interior of a residence for painting. Barajas-Castellanos admitted that he was the contractor and business owner and that the employee was his employee, and that he did not have workers' compensation insurance.   Read more

Former Firefighter Charged With Fraud (PA) - David Jerri Jr., a former deputy fire chief, has been charged with insurance fraud and theft for allegedly collecting benefits from a fraudulent workers' compensation claim. Jerri's workers' compensation claim stated that he had injured his hand while at work, but the police have stated that the injury did not occur in a work setting. Jerri has also been recently arrested on unrelated burglary charges.   Read more

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