Indictment alleges N.Y. contractor defrauded state insurance fund of $3M
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A New York contractor has been indicted for allegedly defrauding the New York State Insurance Fund of nearly $3 million by underreporting employee payrolls in order to reduce his amount of required state insurance premium payments.
Manhattan District Attorney Alvin L. Bragg Jr. announced Thursday the charges against Juan Escobar and his drywall and carpentry companies – Infinity Drywall Corp., Infinity Quality Services Inc., JMC Drywall Corp. and JJM Buildings Inc.
The defendants were indicted on felony counts of conspiracy, insurance fraud and falsifying business records.
According to authorities, Mr. Escobar issued cashier’s checks to shell companies in the names of family members that were made to appear as legitimate payments to subcontractors for construction work, and the proceeds were funneled to an off-the-books payroll, often to the tune of $50,000 per week.
Prosecutors said Mr. Escobar ordered injured workers to falsely claim that their injuries did not occur at jobsites, and he instructed workers to avoid safety inspectors or gave them cash if they agreed to not file workers compensation claims.
Mr. Escobar is also accused of failing to report work injuries to the New York State Insurance Fund and he would misrepresent a worker’s employment status if a comp claim did ultimately get filed.
Prosecutors said the actions left workers on large construction projects underinsured and unprotected.
The state’s insurance fund provides workers comp and disability benefits to New York employers.
The D.A.’s Office said Mr. Escobar cashed more than $26 million in checks at locations in Manhattan and Queens during the alleged scheme, which is said to have taken place between November 2013 and October 2021.
The money was allegedly used to fund the companies’ unreported payrolls.
