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Alexei Rivero Misclassified Workers to Avoid Paying Workers’ Comp and Other Benefits, Pleads Guilty to Fraud

cloudy-1866581_1920-300x200An executive of a trucking business based in Florida has pleaded guilty to two counts of wire fraud for his part in a scheme to defraud the United States Postal Service (USPS) by avoiding paying for workers’ compensation insurance and other benefits for his employees.

Alexei Rivero, age 46, was vice president of Florida Carrier and Brokerage Service Inc., a company which had contracts with the USPS to haul mail. According to court documents, Rivero “was authorized to sign any and all legal documents on Florida Carrier’s behalf.” The contracts with the USPS were entered into between July 2007 and December 2012.

Contracts to haul mail for the USPS must adhere to the McNamara-O’Hara Service Contract Act of 1965 (SCA). According to the SCA, contractors who enter into certain government contracts in excess of $2,500 are required to pay their workers at least the prevailing local wage. The SCA also requires the contractor pay for fringe benefits, including welfare and health as well as vacation time and holiday pay. Florida Carrier’s contracts with the USPS also stipulated that Florida Carrier would pay workers’ compensation insurance, Social Security taxes, and both state and federal unemployment taxes.

After the USPS awarded the contracts, they gave Florida Carrier the funds to cover these fringe benefits. In all, the USPS paid about $1.2 million for payroll taxes for the drivers and $1.5 million for the benefits.

Court filings suggest, however, that Rivero deliberately misclassified his drivers and never passed this money onto his drivers. Rather than classifying them as employees as he was contractually required to do, Rivero classified the drivers as independent contractors. As a result, Rivero issued Forms 1099 and not W-2s as was required. Additionally, by misclassifying his workers as independent contractors Rivero avoided paying the workers compensation insurance premiums he was required to pay.

In this way, court documents alleged that Rivero misappropriated the $2.7 million intended for his employees.

Rivero’s lawyer attempted to argue that the five-year statute of limitations for wire fraud was applicable here as the contracts the charges were based on were entered into before 2013. This argument was rejected because the two wire transfers which formed the basis of the case were made on May 31 and June 21, 2013, and so the statute of limitations would begin after that date. Since the indictment was filed on May 31, 2018, the statute of limitations did not apply.

The investigation was conducted by the USPS Office of Inspector General (OIG) in partnership with the U.S. Attorney’s Office. It began in August 2011 when someone called the OIG complaint hotline. The investigation took several years to complete. Speaking in court, Special Agent Bryce Dahlin of OIG explained why the investigation had taken so long, noting that “It’s a very complex investigation with financial records dating back many years, many moving parts, different institutions, financial institutions, different individuals associated with this case.”

In a statement, the U.S. Attorney for the Southern District of Florida Ariana Fajardo Orshan said that this “guilty plea reflects the importance and impact of our continuing efforts to protect the rights of workers hired to perform services under government contracts.”

Rivero, who will be sentenced on August 23, faces up to two decades in prison.

Florida Workers’ Compensation Fraud Defense Attorney

If you are involved in a worker’s compensation fraud investigation, then you should hire a lawyer. Contact us to set up a free initial consultation and work with one of Florida’s most experienced workers’ compensation fraud defense attorneys.

Sources

2019-06-17 Former Trucking Executive Pleads Guilty to Two Counts of Wire Fraud in USPS Mail Contracts Case