Insurance Journal, William Rabb, April 17, 2023
The owners of a Fort Myers roofing company, one that has been the subject of a number of complaints from consumers and which has filed multiple assignment-of-benefits lawsuits against property insurers, have pleaded guilty to more than $1 million in tax evasion.
David T. Aaron and Russell Ultes, co-owners of Marlin Construction Group LLC, cashed millions of dollars of customer checks at check-cashing businesses in order to underreport earnings and avoid federal taxes, federal prosecutors said last week. The men also used the cash to purchase luxury items for themselves, including jet skis and automobiles, according to the criminal complaints.
“In total, Aaron and Ultes caused a tax loss to the IRS of over $1.4 million,” the U.S. Department of Justice said in a news release.
The men could face as much as five years in prison, along with restitution requirements and fines.
Marlin Construction Group is well known to some Florida property insurers. Court records show that in 2018 and 2019, the firm filed at least three AOB lawsuits, against the Hartford Insurance Co., Metropolitan Casualty Insurance Co., and Church Mutual Insurance Co. All were removed to federal court and were settled by 2021. Marlin also filed as many as 15 suits in Collier County, against Castle Key Insurance, United Property & Casualty Insurance Co., FedNat Insurance, Avatar, First Protective, St. Johns and other property insurers in recent years, records show.
The roofing and construction firm also has seen more than 20 complaints filed against it with the Better Business Bureau. Some customers charged that the firm did not complete roof jobs, left leaks in the roof, or caused other damage to the property. And in 2021, WINK TV news in Fort Myers reported that a Citizens Property Insurance Corp. investigator recorded a Marlin employee deliberately damaging roof shingles on a home.
An affidavit from the investigator notes that, “Citizens had a previous suspicious claim with Marlin with the allegation that an employee, TJ McCowan, with Marlin was allegedly damaging roofing materials and exaggerating the damage prior to the adjuster’s arrival,” the news station reported.
The Florida Department of Financial Services investigated the matter and another Marlin employee told investigators that McCowan had been instructed on how to cause damage to the roof so that the homeowner would qualify for a new roof, paid by the insurance carrier, WINK reported.
Aaron and Ultes could not immediately be reached for comment.
The tax evasion and check-cashing problem is not unheard of in the construction business, prosecutors have said. It worked like this: Marlin Construction was an “S” corporation, based in Fort Myers. Companies organized under subchapter S of the U.S. tax code are considered “flow-through” entities, with all gains and losses passed to their shareholder owners, court documents show.
Marlin was owned by Samber Contracting LLC, which was owned by Ultes, and by DNC Holdings LLC, owned by David Aaron. Instead of properly reporting income from the Marlin company, from 2018 to 2020, Aaron and Ultes cashed more than $3 million in checks from customers, the criminal information documents charge.
The men then provided false information to Marlin’s tax preparers and falsified their own personal tax returns, prosecutors said.
Official documents did not indicate if the company also underreported payroll in order to reduce workers’ compensation premiums, a widespread problem in the U.S. construction industry. Florida’s Division of Workers’ Compensation records show that no record of comp insurance could be found for Marlin Construction Group.
Marlin and Aaron hold active contractor licenses, according to the state Department of Business & Professional Regulation. No license information could be found for Ultes or Samber Contracting.
News article: https://www.insurancejournal.com/news/southeast/2023/04/17/716726.htm