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Six shell corporation owners have been arrested for carrying out an elaborate workers compensation insurance fraud scheme, the Florida Department of Financial Services' Division of Insurance Fraud said.
The large-scale premium fraud scheme involved creating multiple shell corporations to obtain less expensive workers comp policies, according to a Monday statement by the division.
Investigators suspect the scheme began in September 2012, according to the statement. Central Florida businesses operated as shell corporations include Alfa Construction, Burgos Construction, Ginel Construction, Rejevaz Services Inc., and PHH Construction, the statement said.
“By grossly deflating accurate payroll amounts, members of this fraud network fraudulently secured low-cost workers compensation insurance policies,” the department said in the statement. “Payroll amounts were concealed through the use of check cashing stores, which circumvented proper bookkeeping measures. After securing certificates of insurance, organizers would 'rent' the certificates to work crews for a fee.”
More than $55 million was involved between the six arrested owners — Jorge Galeano-Nasser, Edwin Burgos, Jason Myers, Emmanuel Frometa, Jeremy Ginel and Rene De Jesus Vazquez — a division spokewoman said in an email.
The statement says work crews were given fake business cards and instructed to present them to the workers comp compliance investigators who routinely check to make sure proper coverage has been obtained, the statement says.
When one of the workers comp policies expired or was canceled, the individuals would simply open another shell company under a different name, according to the statement.
While the six shell corporation owners have been charged with “organized scheme to defraud,” additional arrests are expected, the department said in the statement. Participants in the fraud could face a maximum possible sentence of 15 to 30 years in prison.
A recent cyber attack may have compromised seven years of incident and payroll reports filed by employers and workers, North Dakota Workforce Safety & Insurance said.