A group of Broward County, Florida residents were arrested this week after investigators accused them of being involved in a check-cashing scheme which allowed them to avoid the cost of worker’s compensation coverage, according to press sources. Those arrested face federal charges of workers compensation fraud and money laundering. A bail bond amount of over a half a million dollars has been set for Hugo Rodriguez, one of the alleged kingpins of the operation. Individual bail bond amounts have not been released. It is not yet known whether any of the accused parties has retained a private criminal defense lawyer.
The arrests apparently came after an investigation led by the Florida Workers’ Compensation Task Force in conjunction with local law enforcement. The Worker’s Compensation Fraud Task Force was created by the State Division of Insurance Fraud and the Broward County Sherriff’s office some time ago as a way to combat worker’s compensation fraud. Reforms created in the 2012 Legislative Session also gave law enforcement officials the ability to better detect workers’ compensation fraud. This investigation, dubbed “Operation Dirty Money” by investigators, has to date netted over $140 million in fraudulently acquired funds. During a news conference held on Friday, the Broward County Sheriff’s deputies proudly displayed a million dollars that they say they seized during their investigation of Rodriguez’s fraud ring.
It is not clear what sparked the investigation’s interest in the group’s activities, nor is it clear how long the investigation took. Reports also fail to mention who most of the defendants are and what they were charged with, as well as how they were purportedly involved. In any case, the investigation purportedly revealed that a construction company called Oto Group, Inc., which is headed by Rodriguez, was defrauding the government.
Oto Group, Inc. was allegedly funneling money through shell companies that Rodriguez created to avoid paying workers’ compensation coverage. Investigators told reporters that the amount of money Rodriguez netted during this operation is believed to be over $70 million. Sources say that this money passed through a variety of money service businesses and remained undetected and undeclared.
According to investigators, Rodriguez’s scheme to avoid paying worker’s compensation for his employees not only put them at risk, but also harmed legitimate businesses. Officials told news reporters that workers’ compensation frauds raise premiums for legitimate organizations, and that taxpayers may end up responsible for the bills if a worker is injured on the job. The Florida Chief Officer stated that, “This kind of fraud is diverting nearly $1 billion from Florida’s economy annually and is putting honest small businesses and employees at risk.”
One of the money service businesses indicted in the case, K&N Food Corp. of Palm Beach County, was the first business Rodriguez and his associates allegedly used. K&N Food Corp. has reportedly agreed to enter into a plea agreement with the Attorney General Office of Statewide Prosecution, and will hand over $490,000 of illicit proceeds that were seized after a search of their business in 2011.