Aggressively Protecting Your Rights

Minnesota drywall company owners charged with fraud

| Jan 23, 2020 | White Collar & Federal Charges

The Minnesota Department of Commerce announced that the government was pursuing felony charges against the husband and wife owners of a drywall company in the state. The duo are accused of insurance fraud and “theft by swindle” regarding their deliberate failure to pay workers’ compensation premiums on their employees.

According to the complaint, the duo purposefully misclassified numerous employees as independent contractors, not employees. Since independent contractors are not covered by workers’ comp, the couple was able to unfairly (and illegally) avoid roughly $300,000 in premium payments over a single year.

As one official pointed out, this isn’t a new kind of crime. Skirting around premium obligations is one of the most common ways that employers try to rig the system. Not only does misclassifying employees help employers save a lot of money, it allows them to underbid their more honest competitors.

The government takes such criminal schemes very seriously because employee misclassification not only puts individual employees at financial risk if they do get hurt, but it can also damage the industry. Companies playing by the rules can be literally forced out of business. 

Officials may also be signalling that there’s a reckoning coming for project developers and general contractors who turn a blind eye to the practice. When a bid comes in on a project that is thousands — or hundreds of thousands — lower than all others, it’s no longer acceptable for a developer to “bury their head in the sand.”

Insurance fraud is a serious crime, and the penalties are fierce. The authorities are increasingly cracking down on these kinds of issues. If you are potentially facing charges for fraud, take steps to protect your rights as quickly as you can.