Insurance Journal, November 21, 2023
A federal judge has sentenced Ramon Paz of Lakeland, Florida to 33 months in federal prison for conspiracy to commit wire fraud to avoid paying for workers’ compensation insurance.
According to the U.S. Attorney’s Office, Middle District of Florida, Paz owned and managed a company that supplied construction services and labor for construction contractors and subcontractors. Under Florida law, Paz’s company was required to have adequate workers’ compensation insurance coverage. Paz’s company had agreements with contractors and subcontractors to use workers purported to be Paz’s employees at construction sites, and these workers were often undocumented aliens who were actually working for and under the daily supervision and direction of the contractors. Paz or others would then regularly receive “payroll checks” from contractors that were cashed at various financial institutions to pay Paz’s purported “employees” and other related expenses.
During the time period charged, Paz falsely and fraudulently represented in insurance applications that his company had a very limited payroll and a very limited number of employees who worked on construction jobsites. Paz also falsely and fraudulently sent wire communications to numerous contractors representing that his company’s “employees” had full workers’ compensation coverage.
In reality, Paz’s company received and cashed more than $21 million in checks from various construction contractors for these purported “employees.” These payroll figures far exceeded the very limited payroll figures that Paz had reported to his workers’ compensation insurance company. As a result, these employees, in reality the employees of other entities, performed work on jobsites without adequate insurance coverage. In addition, the insurers lost premiums they would have charged had they been aware of the true number of workers their policies were thus being manipulated to cover.
As a result of these misrepresentations, prosecutors said Paz’s company also disclaimed responsibility for ensuring that jobsite workers were legally authorized to work in the country and that required state and federal payroll taxes were being paid for these workers. The contractors who actually paid these workers’ wages and used their services were thus also able to avoid responsibility for those duties as well.
This case was investigated by Homeland Security Investigations and the Florida Department of Financial Services. It is part of a lengthy investigation by those agencies into the use of shell companies and “ghost” employees in the construction industry.
The court also entered an order of forfeiture against Paz in the amount of $500,731, the proceeds of the wire-fraud conspiracy. Paz had pleaded guilty on February 8, 2023.
News article: https://www.insurancejournal.com/news/southeast/2023/11/21/749053.htm