Misclassified

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When filling out official paperwork that is ultimately submitted to a government agency, it’s really important to get the facts straight. (Otherwise, the errors could come back to haunt you.) That’s the case for an Ohio mulch supplier who committed workers’ compensation fraud by incorrectly reporting payroll and misclassifying his employees in order to get reduced workers’ compensation premiums.

The operator of the mulch company, which also sells top soil, stone and landscaping products, served as a trustee for Jackson Township during the 1980s and 1990s. So, you could say he was an involved community member. (Not sure what his reputation was during that time, but after he made the misclassification mistakes detailed in today’s fraud article, you can guess that the community may not have a very good opinion of him now.)

The small business owner’s defense attorney explained that the hardworking man faced constant pressures to meet payroll while keeping the company running. (Ah, the joys of running a small business. Apparently, he cheated to keep the doors open.)

Over four years, the operator underreported payroll and misclassified some of his workers, so he could avoid paying the skyrocketing workers’ compensation premiums. Specifically, he classified some of his semi-truck drivers as office employees to get reduced workers’ compensation premiums. The operator explained that he believed drivers could be classified as clerical employees because they had to fill out logs which are provided to the U.S. Department of Transportation. (You’ve got to be kidding me. Uh, no.)

The prosecutor in the case said that the mulch company owner underreported his payroll by more than $500,000. (Apparently, he entered lower payroll numbers with the Ohio Bureau of Workers’ Compensation (BWC) on eight separate occasions.) The prosecuting attorney estimated that the business owner owes the BWC $350,000 in workers’ compensation premiums for his miscalculations.

Lucky for the 64-year-old mulch company owner from Ohio, the BWC was not out to ruin him. The agency was willing to work with him on the misclassification issues. Also, because the defendant did not commit a violent offense and had no prior criminal record, he was found guilty of a reduced count of workers’ compensation fraud.

Perhaps the only alternative that this business owner could come up with to keep his business running, was to lie about his payroll situation. While he was afraid that his company would fail, he should have considered the consequences of his illegal actions. He not only put his workforce, which peaked at 70 employees, at risk if injured, but also damaged his reputation in the community. His illegal efforts to keep his company open quite possibly could be the very reason the doors may close for good.

Today’s “Fraud of the Day” is based on an article entitled, Earth ‘n Wood operator convicted in Stark county,” posted on CantonRep.com on September 12, 2018.

CANTON The operator of the Jackson Township-based Earth ‘n Wood was convicted Wednesday of a reduced count of workers’ compensation fraud and won’t face prison time.

Following roughly two hours of deliberations, a Stark County Common Pleas jury found Craig C. Snee, 64, guilty of the fourth-degree felony.

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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.