After a years-long investigation involving state and local law enforcement teams, Florida authorities have charged seven people in a $100 million workers’ compensation payroll scheme that paid workers in cash and defrauded insurers of premiums.
“This criminal enterprise systematically exploited Florida’s workers’ compensation system for personal gain,” Florida Attorney General James Uthmeier said in
a statement. “They undercut legitimate contractors, defrauded insurance companies, and operated an illegal money-service operation that moved nearly $100 million.”
The defendants allegedly created a number of shell companies that obtained minimal workers’ compensation insurance coverage by greatly underreporting payroll. They then “rented” their certificates of insurance to subcontractors for a fee. At the same time, the network processed and cas
hed the contractors’ payroll checks—paying workers in cash through an unlicensed money service business, Uthmeier’s office said.
Companies involved included JYK Construction Concrete, Ace Concrete and Pavers, DMF Construction Services, EVB Construction Services and others, according to court filings in Palm Beach and Broward counties.
Insurers that were allegedly defrauded through the underreported payroll scheme include Pie Insurance, Obsidian Specialty, Kemper Auto Insurance, James River Insurance, ICW Group, Allstate Insurance, MidSouth Mutual Insurance, Kinsale Insurance, Accredited Surety and Casualty, and Gemini Insurance Co., a complaint filed in Palm Beach County Circuit Court shows.
Surveillance operations showed that the defendants worked from a West Palm Beach office to process payroll checks and distribute cash directly to workers. Law enforcement seized more than $2.4 million in connection with the case.
The charges against the seven defendants include organized scheme to defraud, operating as an unlicensed money service business, workman’s compensation fraud, and money laundering.
Court records in Palm Beach County show that investigators had been surveilling the group and accessing bank records for almost two years. In March of this year, the Broward County Sheriff petitioned a court to force the defendants to forfeit almost $3 million in assets and cash.
Gutierrez oversaw some of the companies involved, while Gustavo Suazo managed others, the South Florida Sun Sentinel reported. Guiterrez, Suazo, Matute, Blandon and Farina have already pleaded not guilty, the newspaper reported.
In answer to the forfeiture petition, Suazo’s attorney has denied the man’s involvement in illegal activities and argues that authorities have failed to state a sufficient claim for forfeiture of assets.