Cheating the System

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Cheating – an act to purposely deceive or mislead someone for personal advantage – can have serious consequences. For instance, cheating on a test can cause a student to be expelled from school. Cheating on a spouse can lead to divorce. Cheating the government by committing workers’ compensation fraud can result in a criminal record, as detailed in a story published in the Missoulian.

The article reports that between 2001 and 2012, a Havre man failed to disclose to the Department of Labor that he owned and operated a lucrative shooting supply business, while collecting approximately $277,500 in workers’ compensation benefits. (Not good. The government is big on transparency these days.) Further research revealed that the self-employed owner’s tax returns indicated that the business returned a profit each year during that time, with the exception of one year.

The man, who was required to report all self-employment or involvement in business enterprises whether intermittent, part-time or full-time, also had to report ownership interest in a company, even if the business did not make a profit. The 76-year-old man made the mistake of reporting hundreds of thousands of dollars in gross receipts from his shooting business on his tax returns, yet he reported to the Department of Labor that he was not working and did not earn an income. (Did he think no one would notice?)

The fraudster pleaded guilty to mail fraud for failure to report that he owned a profitable business, which made him ineligible to receive workers’ compensation benefits. Lucky for him, he was sentenced to four years of probation and ordered to pay restitution of $84,000, instead of the maximum sentence of 20 years in prison, a $250,000 fine and three years supervised release.

Cheaters might get away with their offense at first, but they usually get caught in the end. It often comes down to how long they can keep up the sham. Eventually, fraudsters make a mistake, such as this man, who thought cheating the system was okay.

Source: Today’s ”Fraud of the Day” is based on the article titled ”Havre Man Sentenced for Work Comp Fraud,” published in the Missoulian on September 27, 2013.

GREAT FALLS, Mont. (AP) — A 76-year-old Havre man has been ordered to pay nearly $84,000 in restitution in a workers compensation fraud case.

The U.S. Attorney’s Office says U.S. District Judge Dana Christensen also sentenced William Szudera to four years on probation on Thursday. Szudera pleaded guilty to mail fraud in June for failing to disclose that he owned a profitable business that would have made him ineligible for approximately $277,500 in benefits he received from 2001 to 2012.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.