Sleight of Hand

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The term ”sleight of hand” refers to someone who quickly and cleverly moves their hands in such a manner that tricks someone into believing something happened when it really didn’t. A Montana Department of Justice press release describes how a business owner used the skill of deception to trick

the Montana State Fund into paying out workers compensation benefits for an injury that didn’t exactly happen the way it was described on his claim form.

The press release stated that a man owned both a Mexican restaurant and a roofing company. He claimed that he injured his knee after falling from a ladder at the restaurant where he had a worker’s compensation policy in effect. (His claim was accepted and for two years, the Montana State Fund paid $39,092 in medical costs and $6,765 in wage loss benefits.)

After the Montana State Fund received a physical therapy note indicating that the man was spending a lot of time on his feet at the restaurant, an investigation was opened to determine if his roofing company was in operation, whether or not he had employees and to see if he was earning wages while collecting worker’s compensation benefits under his restaurant’s insurance policy. (I’ll give you three guesses to all of these questions and the first two answers don’t count.)

The business owner told the Montana State Fund that he did not conduct any roofing since having knee surgery and that he did not employ anyone during the policy period. (Investigators discovered a different story.) Apparently, he had purchased more than $45,000 in roofing supplies and had them delivered to 11 houses during the policy time period and employed two men to assist with the roofing work. (Some of the homeowners interviewed by investigators confirmed that the three men had worked on their homes during the time period.) As you might guess, the owner did not report his employees or their pay under the worker’s compensation policy for the roofing company. (Investigators also learned that he had injured his knee while working on a new home, not while in his restaurant as previously claimed.)

The 36-year-old fraudster pleaded guilty to felony theft and employer misconduct. He received a six year concurrent deferred sentence and was ordered to pay a $2,000 fine and restitution of $45,858.02 to the Montana State Fund.

The press release stated that this was a highly unusual case because the defendant defrauded Montana’s worker’s compensation system as an employer and as an employee. (Montana law requires employers to carry worker’s compensation insurance coverage for all employees.) It was illegal for the business owner to not carry insurance on his roofing company employees. It was also illegal to file a fraudulent claim under a lower premium rate. (Insurance premium rates are lower for businesses such as restaurants when compared to rates for the roofing industry where the risk for accidents is higher.)

This fraudster may have thought that his sleight of hand would not be caught, but investigators definitely blew the roof off of his scam.

Source: Today’s ”Fraud of the Day” is based on a press release entitled ”Columbia Falls Man Ordered to Pay Over $45,000 in Restitution to Montana State Fraud” released by The Montana Department of Justice on July 7, 2015.

On Thursday, Columbia Falls resident Salvador Maldonado-Medina pled guilty in Lewis & Clark County District Court to felony theft and employer misconduct for receiving Montana Workers’ Compensation benefits while working after claiming to be injured at one of his businesses, when in fact he was injured at another business he owned, where he elected to have no workers compensation coverage for himself or his employees.

In March 2015, Maldonado-Medina, 36, was accused of defrauding the Montana State Fund for $45,858.02 in wage loss and medical benefits he received from 2013 to 2015. Maldonado-Medina pleaded guilty to charges of employer misconduct and felony theft in District Court in Helena and on July 2 was given a six-year concurrent deferred sentence, and ordered to pay a $2,000 fine and restitution to Montana State Fund in the amount of $45,858.02.

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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.