Businesses pay a great deal of money to insure that their most valuable assetstheir employeesare protected in the event an on-the-job injury occurs. When workers’ compensation companies collect premiums from employers, but fail to pay out benefits after a legitimate injury happens, not only do the workers lose out, but the employers do as well. (A business can’t be profitable if their employees aren’t able to work.)
Today’s ”Fraud of the Day” details the story of a businessman who stole millions of dollars from a California Indian tribe that paid into a workers’ compensation insurance company that he managed. An article published in The Sacramento Bee explains that in the early 2000s, there were many companies in California that offered extremely discounted worker’s compensation insurance premiums to employers across the state who were incurring high insurance costs. (But, insurance regulators cried foul and claimed that the insurance policies did not adequately protect workers. However, it was too late and many companies purchased the policies.)
The story states that this man’s company was one of many that closed its doors after a state law went into effect stabilizing exorbitant workers’ compensation insurance premiums for employers. When this company collapsed, 117 injured workers were left without workers’ compensation insurance payments. (At that time there were more than $1.8 million in outstanding claims. Employees were out of work and had no way to pay their medical bills.) Prior to the closure, the fraudster had diverted $7.3 million from the company (after which he ”retired” to Wisconsin).
The 46-year-old insurance scammer ended up pleading guilty to two counts of fraud. He was sentenced to three years and five months in prison.
This man’s selfish acts impacted not only the injured workers who deserved the benefits, but also the employers who paid the workers’ compensation premiums. It looks like he is now out of a job indefinitely and the justice system will ensure that he will pay a high premium for his fraudulent behavior.
Source: Today’s ”Fraud of the Day” is based on an article, ”Ex-El Dorado Hills businessman sentenced in workers’ comp fraud,” published by The Sacramento Bee on August 19, 2016.
A former El Dorado Hills businessman was sentenced to prison Friday for looting millions of dollars from a workers’ compensation company he was running for a California Indian tribe.
Gregory J. Chmielewski, 46, was sentenced to three years and five months in prison by U.S. District Judge Garland Burrell Jr. in Sacramento.
Prosecutors said Chmielewski, who now lives in West Bend, Wis., diverted $7.3 million from Independent Management Resources, a company he was managing on behalf of the Fort Independence Community of Paiute Indians in Inyo County. The company collapsed in 2007, leaving 117 injured workers across the state owed $1.8 million in unpaid workers’ comp claims.