www.Insurancejournal.com, January 27, 2023
Manhattan District Attorney Alvin Bragg, Jr. within the past week announced two separate indictments alleging workers’ compensation fraud, one totaling $7 million in premiums and the other, $3 million.
In one case, Juan Escobar, and his drywall and carpentry companies, were charged with defrauding the state workers’ compensation provider, New York State Insurance Fund (NYSIF), of nearly $3 million in insurance premium payments. The charges include conspiracy, insurance fraud and falsifying business records.
According to court documents, Escobar defrauded NYSIF by “significantly underreporting his payroll” during annual insurance premium audits. Escobar cashed more than $26 million in checks at locations across Manhattan and Queens during the course of this scheme, using the cash to fund his companies’ unreported payrolls, the documents allege.
The district attorney claims that Escobar and his companies — Infinity Drywall Corp., Infinity Quality Services Inc., JMC Drywall Corp. And JJM Builders, Inc. — fraudulently reported the smaller employee payrolls to the state, grossly reducing the amount of insurance payments Escobar and the companies were required to pay to NYSIF, and leaving workers on large construction projects underinsured.
To facilitate the scheme, Escobar allegedly issued cashier’s checks to shell companies in the names of family members, which were then cashed at his direction. Prosecutors say the cashier’s checks were made to appear as legitimate payments to subcontractors for construction work. These proceeds were funneled to his off-the-books payroll, which typically totaled more than $50,000 a week. Escobar gave employees cash in envelopes near a train stop in Sunnyside, Queens.
According to prosecutors, Escobar hid the missing workers from the reported payroll using multiple tactics. He directed injured workers to falsely claim workplace injuries occurred elsewhere, told them to avoid detection from site safety inspectors or gave workers cash in exchange for failing to file workers’ compensation claims. Escobar also failed to report the worker injuries to NYSIF. When a workers’ compensation claim did get filed, he would misrepresent the worker’s employment status. Continue article