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Construction Business Owners Arrested for Workers’ Compensation Fraud

scaffold-1207389_1920-300x200Two business owners in upstate New York were arrested last week for their part in an alleged workers’ compensation fraud scheme.

Jose Sanchez, age 50, resident of state capital Albany, is owner of Sanchez Partner Construction, and Leroy Nelson Jr., age 38, also of Albany, is owner of JRN Construction. Sanchez and Nelson have each been charged with the felony count “first-degree offering a false instrument for filing.” Sanchez has also been charged with the misdemeanor count “failure to secure workers’ compensation.”

The pair are alleged to have filed fraudulent documents relating to a construction project in the city of Amsterdam, New York. Sanchez Partners Construction was contracted for a roofing project on Pulaski Street, but in late October 2018, the city’s engineering department ordered that work cease on the project as no permit to build had been issued.

Sanchez applied for a permit on 5 December. As part of his application, Sanchez claimed his company had no employees. In New York state, companies where the business owner has no employees are not required to carry workers’ compensation insurance. An investigation by the Office of the Inspector General, however, showed that Sanchez did, in fact, have a number of employees working on the project. Since Sanchez had no workers’ compensation insurance coverage, his permit application was denied.

The following day, Nelson applied for a permit for the same project. Nelson claimed his company would take over the project. Since Nelson’s company carried workers’ compensation insurance for its employees, the permit was granted.

The investigation showed that JRN Construction did not take over the project, nor was it involved in any way with the construction. Instead, Sanchez Partner Construction continued work on the project.

In recent months, I have reported on many similar cases from across the country. For example, in Monterey in California, Salvatore Carbone claimed he had no employees at his bar in order to avoid paying workers’ compensation insurance premiums. Carbone was sentenced to 40 days in jail and three years’ probation. As long as he completes his period of probation satisfactorily, he will not need to pay the statutory $10,000 fine.

In Ohio, Craig Snee was found guilty of misclassifying workers in order to reduce his workers’ compensation rates. For example, he classified his truck drivers as office workers because office workers are a lower-risk job. The Stark County Prosecutor’s Office determined that Snee owed around $350,000 in unpaid premiums.

Since workers’ compensation can represent a sizeable overhead for businesses—especially businesses in high-risk fields such as construction—business owners may be tempted to try to reduce their premiums or avoid them altogether in order to stay competitive. Ultimately, however, these companies are putting the health of their employees at risk, breaking the law, and also raising the cost for companies that follow the rules.

This is the second time Nelson has been charged in relation to a workers’ compensation fraud investigation. In 2016, he was found guilty of a charge of first-degree offering a false instrument for filing.

“These two contractors, one of whom with a recent history of fraud, chose a course of deception over honest business practices,” said New York’s inspector general, Catherin Leahy Scott. “My office and our local and state enforcement partners will not tolerate any corruption of a critical benefits program meant to protect honest, hard-working employees.”

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.


2019-04-16 Albany Contractors Accused in Amsterdam Workers’ Compensation Fraud

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