The Connection Magazine The Connection Magazine Fall 2017 | Page 25

FRAUD CASE
PREMIUM AUDITOR LENDS A
HAND TO FEDERAL AGENTS IN
FRAUD CASE
THE wheels of justice can turn ever-so-slowly. Unlike
Law & Order, where both the crime and trial are resolved
in 60 minutes prime time, real life takes far longer. In
fact, for A.I.M. Mutual, one case of fraud took almost a
decade to prove.
A member of our premium audit team actually agreed
to join with law enforcement on a “sting” operation, which
ultimately led to a guilty plea. The sentence included
federal prison time, a fine, and restitution of $875,452 to
the IRS and $69,944 to A.I.M. Mutual.
Our team member prefers to remain anonymous,
but our own “Lennie Briscoe” definitely went above and
beyond. The case, prosecuted at the federal level, was
investigated by the Internal Revenue Service, Homeland
Security, the FBI, and the Insurance Fraud Bureau (IFB).
Lennie credits a thorough claim investigation by
Regional Specialist Paul Havelick, along with support
from the Audit Manager at the time, John MacDougall,
with helping build the evidence needed. It was one of
the first cases Lennie ever referred to the IFB, standard
procedure when fraud is suspected. Raising the red flag
was an injured worker who reported being paid in cash
and was a late addition to the payroll with only one small
check ever issued. The only other employees on the
payroll were family members. A private investigation
suggested additional workers who were not reflected
in the payroll numbers, but the evidence was deemed
insufficient at the time.
Federal investigators, however, continued to watch
and eventually, the number of agencies involved grew.
They asked Lennie to work with an undercover federal
agent, arrange an audit with the business owner, and
help elicit answers to some key questions. On the day
of the meeting, Lennie recalls being briefed by the
25
investigators—seemingly all driving black cars—and
laughing when told: “Don’t worry. If anything happens,
we’ll be right here.” Thankfully, the session went
without a hitch. Two more years went by before A.I.M.
Mutual learned about the successful prosecution and
settlement.
Given the financial penalties, there was like ly
significant unreported payroll for this particular
business. According to the June 2016 IFB Focus Fraud,
the business owner “concealed a substantial portion of
the company’s business revenues and payroll and filed
false tax returns, evading a significant portion of federal
taxes, and fraudulently reduc[ed] the premiums for
workers’ compensation insurance owed in connection
with the business.”
Lennie explained the IFB has difficult benchmarks
to reach in order to prove premium fraud, and it always
takes a considerable amount of time. But that doesn’t
deter him. In fact, in May, another of Lennie’s cases
yielded an indictment. The owner of two Boston-based
construction companies was charged with six counts
of fraud, failure to provide workers’ compensation
insurance, and five counts of larceny.
Robin D’Eri, A.I.M. Mutual’s Premium Audit Supervisor,
gives Lennie a lot of the credit. “His contribution to the
investigation of a fraud case has led to an indictment,”
she said. “His ability to assist in these investigations and
continue working his inventory of audits makes him an
outstanding asset to A.I.M. Mutual.”
For what brokers can do to help deter and identify premium fraud, refer
to “Tips for Preventing Premium Fraud in Workers’ Compensation”
by Jodi Williams in the Spring 2017 edition of The Connection.