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Massachusetts Business Owner Charged with Workers’ Compensation Insurance Fraud

calculator-1680905_1920-300x200The operator of an employment agency in central Massachusetts has been arrested for allegedly concealing his company’s payroll in order to lower his workers’ compensation insurance dues.

Tam Vuong, age 43, ran employment agency UT Services Inc., although it is his father, Ut, who appears as the company’s president and treasurer on the business registration. Vuong allegedly told UT Services’ workers’ compensation insurance carrier that the business had just one employee and a payroll of only $50,000 per year. UT Services, in fact, had several dozen employees and a considerably higher payroll.

According to court filings, Vuong also underreported payroll on filings with both federal and state authorities. He allegedly showed falsified certificates of insurance to clients. Additionally, to help conceal the true costs of his business, Vuong paid the majority of UT Services’ employees in cash.

Vuong has operated or owned several other employment agencies. Before UT Services, he ran Prime Labor Services. He moved his business operations from Prime Labor Services to UT Services in late 2017, when federal agents carried out search warrants on that business. Vuong had also underreported payroll on Prime Labor Services.

I have reported on similar cases across the country, where employers have attempted to avoid paying workers’ compensation insurance. These premiums can be a sizeable overhead for businesses, especially for businesses in high-risk categories such as construction. In Washington state, for example, James Miller was indicted with underreporting payroll in order to lower the workers’ compensation premiums of Barret Business Services Inc; Miller faces 20 years in prison if convicted. In Ohio, Craig Snee was found guilty of concealing payroll and misclassifying employees—including classifying semitruck drivers as office workers—to pay lower workers’ compensation insurance dues.

This is not the first time Vuong has been charged with workers’ compensation insurance fraud. In 2010, he pleaded guilty to tax and insurance fraud. Between 2004 and 2008, Labor Solutions, the employment agency Vuong ran at the time, failed to disclose $11 million in payroll. By doing so, Vuong avoided paying not only the correct workers’ compensation insurance premiums for Labor Solutions, but also underpaid the company’s corporate excise tax and unemployment insurance contributions.

It was estimated that, through the fraud conducted between 2004 and 2008, Vuong had avoided paying his workers’ compensation insurance carrier over half a million dollars. The loss to the state from unpaid unemployment insurance dues was in excess of $650,000.

Vuong was also found to have violated 59 of Massachusetts’ wage and hours laws. For example, Vuong’s employees did not receive overtime pay during 2007-2008. Many were also paid below the minimum wage, while others were illegally charged $2 or $3 per day for transportation—something which then reduced their pay below the minimum wage.

Judge Janet Kenton-Walker said Vuong had taken advantage of his employees for personal gain and, at the same time, had defrauded Massachusetts of a great deal of money. She ordered Vuong pay $500,000 in restitution and placed him on probation for five years.

In the current case, Vuong has been charged with two counts of wire fraud. If found guilty and convicted, he faces up to 20 years in prison and a maximum of three years of supervised release. He also faces a fine for each count of wire fraud up to $500,000 in total.

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

2019-04-12 Worcester Employment Agency Owner Charged with Wire Fraud

2010-08-20 Ex-Temp Owner Guilty of Frauud