Learn from stories around the country.
This page is a compilation of news stories from around the nation about illegal activities committed by labor brokers and, in some instances, their customers. Wherever possible, we have provided a link to the source of the original story. The one consistent thread throughout these stories is that wherever labor brokers go, trouble tends to follow - in the form of stop-work orders, mechanic's liens, bond claims, and government investigations. If there is a lesson to be learned from these stories, it is that there are serious pitfalls to allowing labor brokers to operate on your project.
Despite our best efforts to provide accurate content, please be aware that some hyperlinks (links to external websites) found on this website may not be accessible, or the content found on the corresponding websites may have changed.
- USDOL Finds Primary Contractor, Labor Subcontractor to be Joint Employers; Wins $203,000 for 224 Misclassified Workers
The U.S. Department of Labor has recovered $203,323 in back wages for 224 Lafayette, La., drywall installers after an investigation by the department's Wage and Hour Division determined that the employees had been misclassified and denied proper overtime compensation. The probe determined that there was a joint employment relationship between Escapade Acoustic Drywall and the general contractor, Lloyd N. Moreau.
- Senate Hearing on "Employee Misclassification Prevention Act"
Common form of payroll fraud not covered by any present labor law; S-3254 would amend Fair Labor Standards Act with record-keeping and notice requirements and civil penalties for employer violations.
- New Online Database Tracks Wage & Hour, Other Completed Cases
Research this growing compilation of employer fraud and safety violations.
- Taxpayer Responsibility, Accountability, and Consistency Act of 2009
- GAO Study Says "Misclassification is a Problem"
Annual Losses of More Than $1.6 Billion; DOL, IRS, OSHA Agree With Calls for Increased Cooperation and Enforcement
- U.S. Treasury Dept. IG Study Cites Billions in Taxes Lost to Misclassification; Calls for IRS-Wide Coordination Unit and Full Research on Current Costs
- IRS and States to Share Employment Tax Exam Result
- Federal Prison For Tax Preparer; One Charged, Co-Conspirator a Fugitive
NATIONAL & INDUSTRY MEDIA
- Federal Prison for Money Laundering in Anchorage Cash-Pay Scam
The owner of a Colorado-based company paid undocumented workers under the table, structured cash bank withdrawals to avoid scrutiny, and used unfair labor-cost advantage to dominate Anchorage market. He was sentenced to 12 months in federal prison plus 3 years of supervised release, and ordered to forfeit $336,753, for currency construction.
- California's Vast Tax and Business Rolls add Clout as 12th State in Payroll Fraud-Prevention Partnership with USDOL
- Contractor Plea Brings 4 Years Suspended, 10 Years Felony Probation, $1.2M Restitution for Public-Works Payroll Fraud
A multi-agency investigation led by the California Department of Insurance led Monica Mui Ung, 51, owner and president of NBC General Contractor Corporation (NBC), to plead guilty to numerous violations of insurance and labor laws on a series of public works contracts. Ung, along with her office manager and payroll specialist, who both previously pled guilty and were sentenced in the case, falsely issued certifications on payroll reports as to the job classifications, hours worked, and amounts paid to its workers. Investigators also found that NBC did not pay prevailing wage, overtime, sick leave, and other statutory benefits as required under labor laws.
- Insurance Commissioner Announces Arrest of Business Owners for $358,000 Premium Fraud
A multi-agency effort led to the arrest of a husband and wife for failing to report over $900,000 in payroll to the State Compensation Insurance Fund (SCIF), resulting in close to $358,000 in underreported SCIF premiums. If convicted, both could face up to 5 years in state prison and a $50,000 fine. This case was the result of a joint investigation between the Shasta County District Attorney's Office, the California Department of Insurance, Fraud Division, SCIF and the EDD.
- Specialty Contractor Group Endorses 'Cracking Down' on Payroll Fraud
In supporting prosecution of a concrete firm that misclassified employees and fraudulently misreported payroll information, the California Professional Association of Specialty Contractors endorsed efforts by incoming Governor Jerry Brown to crack down on payroll fraud and related misconduct in the construction industry.
- Roofing Contractor Gets 10-Year Term, $500,000 Restitution in Record Workers Comp Insurance Fraud Case
The owner's sentence covers 33 felony counts, restitution to the State Compensation Insurance Fund (SCIF), and enhanced sentencing for aggravated white-collar crime over $500,000. His wife is also charged in the case.
From 2000-2008, the two fraudulently filed 42 claims for uninsured injured workers while reporting to SCIF just $3 million of their actual payroll of $32 million. The scheme cost SCIF more than $253,000 in uncovered claims and millions in unpaid premiums.
- AG Wins Back Pay, Payroll Fraud Protections From Employer of 200 Drywallers
Charles Elveth Construction settled after Attorney General Edmund Brown's investigation found more than 1,200 violations of California wage-and-hour, tax, insurance, and other laws.
- Contractor Gets 1-year Term for Tax Evasion to Avoid Workers Comp Payments
- Investigation Shows that 20% of Florida Contractors Wrongly Misclassify Workers
The investigation, which looked at the misclassification of workers in Florida and 27 other states, found that unethical contractors were able to work on stimulus-funded building projects even as they ignored labor laws and avoided paying state and federal taxes.
- Florida Office of Financial Regulation Applauds Passage of House Bill 217
- Circuit Court Affirms 18-Year Prison Term for Check-Cashing Role in $130-million Payroll Fraud Scheme (WorkCompCentral.com)
- Miami Herald Joins in Praise of State CFO Working Group on 'Invisible' Payroll Fraud
A Miami Herald editorial has joined in praising Florida Chief Financial Officer Jeff Atwater for creating a working group of state agencies and industry leaders to go after payroll and workers? compensation premium fraud involving scams in the check-cashing industry.
- Miami Contractor Sentenced to 18 Months In Prison, $500K Restitution for Employment Tax Fraud
Reynaldo Orozco was sentenced to 18 months in prison by a U.S. District Court and ordered to pay $504,047 in restitution for unpaid taxes. He had previously pleaded guilty to one count of filing a false employment tax return related to a check-cashing scheme where he cashed company checks written to non-working sub contractors and used the cash to pay his employees. From 2004 through 2007, his company failed to report approximately $3,294,426 in cash wages to the IRS.
- Contractor Faces Five-Year Term, $352,605 Restitution for Tax Evasion via Cash Payrolls
From 2005 - 2007, the Miami contractor wrote checks to non-working and even nonexistant subcontractors; cashed those checks and paid his employees with the cash; and did not report, withhold, or pay employment taxes on the cash wages. He faces up to five years in prison and has agreed to pay restitution to the IRS of $352,605, cited as the mimimum total tax loss in the case.
- Construction Company Owners Get Prison Time for Payroll Fraud
- Sentences, Fines for Five in $15M Workers Comp Check-Cashing Scheme
- Gov. Paterson Signs 'Construction Fair Play Act'
The bill adds muscle to the state's award-winning Joint Enforcement Task Force on Employee Misclassification. Provisions include presumption of employee status, simple 'ABC' criteria for status, corporate officers subject to penalties, worker notifications, and whistleblower protection.
- Enforcement Task Force Wins National Leadership Award
Department of Labor Commissioner Gardner and Jennifer Brand, Executive Director of the New York State Joint Enforcement Task Force on Employee Misclassification, won the Natl. Assn. of State Workforce Agencies' State Excellence Award for Leadership (SEAL) for 2010.
- Payroll Fraud Sweep Nets 12 of 21 Contractors on Single Project
A NYS DOL Joint Enforcement Task Force sweep of "The Province", a 14-building dorm complex at Rochester Institute of Technology, cited 12 of 21 contractors for misclassification, workers comp, overtime, and cash-pay violations. Several stop-work orders were issued, and initial charges involved more than $210,000 in fines, unpaid taxes and insurance, and back wages.
- U.S. Cracks Down on Contractors as Tax Dodge
Click to read this page-one story by Stephen Greenhouse from NYTimes.com.
- NY Yonkers construction company owner pleads guilty in cash-pay tax evasion scam