Nailing Fraud

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Construction sites are typically full of large machines, nails scattered in the dirt and caution signs. There’s a lot of scraping and banging as things are being built. While men and women with hard hats and neon vests bob in and out of building frames, operate equipment and manage teams to complete tasks, a silent uninvited guest can sometimes make an appearance – fraud. Today’s Fraud of the Day from The Commercial Appeal highlights such an instance when fraud makes an appearance during construction. A Memphis-based construction contractor recently pled guilty to workers’ compensation fraud, admitting that he placed his workers, usually undocumented immigrants, on construction sites without notifying the workers’ compensation insurance companies, which is required by law. (Omission is a form of ”lying.”) The judge suspended his nine-year prison sentence to 10 years of probation. He must spend weekends in jail for one year and provide $1.2 million in restitution. Back in 2003, the fraudster explained to the Denver Post that he was running a $6 million-dollar-year construction business, promising companies cheap labor and no hassle. Those employed at his company told officials they often worked 40 hours/week, receiving $9-$16 an hour without workers’ compensation. (So, what happens if they get hurt on the job? $9/hour might not cover expenses!) The workers revealed they never complained, because of their immigration status. (He is hiding his employees to avoid insurance premiums AND may be hiring employees ineligible to work in the US. Sounds like he is stealing jobs from citizens and stealing money from the government.) An executive secretary-treasurer of the Mid-South Carpenters Regional Council commented on the case: “Companies like [the defendant’s] typically supply labor to larger construction companies. They cheat their workers’ compensation insurers out of premiums so they can steal jobs away from law-abiding employers. It happens on large construction projects, and it is unfair to honest employers and taxpayers.” (Not only are they committing fraud by not reporting the employees to the insurance companies, but they are taking away business from companies that operate legally.) Officials say this is the first prosecution made in the state of workers’ compensation premium fraud, and they are looking to crackdown on this type of fraud in the future. Fraud may seem to be a silent guest at construction sites, but it is making a big ruckus in courts. Sounds like a man who may have put our citizens out of jobs by hiring undocumented workers and endangered the lives of those he did employ got off pretty easy with weekends in jail. At least investigators nailed this fraud – onto the next.

Source: Today’s ”Fraud of the Day” is based on an article titled, ”Labor Broker Guilty in Worker’s Compensation Fraud,” and published by The Commercial Appeal on December 6, 2012.

A Memphis-based construction contractor has pleaded guilty to four counts of workers’ compensation fraud. Mike Nobles admitted he put employees on construction jobs and concealed them from workers’ compensation insurance companies.

“Companies like Nobles’ typically supply labor to larger construction companies,” said James Kerley, executive secretary-treasurer of the Mid-South Carpenters Regional Council. “They cheat their workers’ compensation insurers out of premiums so they can steal jobs away from law-abiding employers. It happens on large construction projects, and it is unfair to honest employers and taxpayers.”

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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.