New Jersey Contractor Sentenced in Workers' Comp Fraud Scheme

The president of a now-defunct Mercer County, N.J., construction company was sentenced to eight years in state prison for stealing more than $450,000, according to Attorney General Jeffrey S. Chiesa.

New Jersey?s AG?s office reported that Herlindo Garcia-Merlos, 49, provided false and misleading information to his company?s workers? compensation carrier, failed to file tax returns or underreported wages for his business and himself to the New Jersey Department of Treasury.

Last year, Garcia-Merlos pleaded guilty to a criminal accusation charging him with two counts of second-degree theft by deception.

Garcia-Merlos was sentenced to eight years in state prison. In addition, he was ordered to pay $315,680 in restitution to New Jersey Manufacturers Insurance Group and $135,462 in restitution to the New Jersey Department of Treasury.

?The lengthy prison sentence imposed upon this defendant should act as a strong deterrent to anyone who fails to provide adequate and lawful workers? compensation insurance,? Attorney General Chiesa said.

Garcia-Merlos was the president of the now-defunct Orients Construction Company, Inc. (Orients), located in Trenton. In March 2009, Garcia-Merlos ceased doing business as Orients and began doing business as Melrose Construction, Inc.

In pleading guilty, Garcia-Merlos admitted that, between February 2007 and April 2010, false and misleading information was provided to NJM Insurance Group. The investigation determined that the type of services rendered by Orients as well as the amount of payroll during the specified policy periods were not true. As a result of the fraud, Garcia-Merlos obtained reduced premiums that his company was not entitled to resulting in the premium difference of $315,680.

Acting Insurance Fraud Prosecutor Ronald Chillemi noted that Garcia-Merlos also pleaded guilty to stealing more than $135,462 by failing to file tax returns for his companies, Orients and Melrose Construction. The investigation determined that Garcia-Merlos failed to file tax returns for Orients and/or Melrose in 2006, 2007, 2008, 2009 and 2010. The investigation also determined that Garcia-Merlos underreported wages on his individual tax returns during the aforementioned years.

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Source: New Jersey Office of the Insurance Fraud Prosecutor

Source: http://www.claimsjournal.com/news/east/2013/01/25/221689.htm

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