Transcript Slide 1
MSB Working Group 8/25/2011 Money Service Business Facilitated Workers’ Compensation Premium Fraud Geoffrey R. Branch Florida Division of Insurance Fraud
The Scheme
A shell company is set up and incorporated and then a minimal workers’ compensation insurance policy is obtained. The company paperwork is then made available for anyone who wishes to use it to work for a general contractor (GC). The GC writes a check to the shell company, which is negotiated at an MSB where a fee is taken out for both the MSB AND the use of the shell company name and Workers’ Compensation insurance policy.
Cashes Check for 5-10%
Money Service Business Currency Transaction Reports Completed in Shell Company Ow ner Name (Un-locatable) General Contractor Prov ides Labor Check to Shell Company Takes Shell Company Check Shell Com pany Ficticious Ow ner
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ssues COI To GC Sets Up Shell Company Obtains Minimal W/C Insurance Facilitator
T akes Cash - %
Obtains Policy & Orders COI's Insurance Agent
T akes Shell Company Check Check Amount in Cash Minus %
Un-Insured Subcontractor Cash Labor Payments
Currency Transaction Reports
CTR’s Totaling 1 Billion Dollars
$124,000,000.00 in FICA was not paid, FICA is commonly known as social security taxes paid 50/50 by the employee and employer. This is enough money to pay a retired person $1,500.00 per month for 6,888 years .
$29,000,000.00 in Medicare taxes (again 50/50 between employee and employer) enough to pay for 386,666 Dr. office visits at $75.00 per visit .
$27,000,000.00 in State Unemployment taxes, $8,000,000.00 in Federal Unemployment taxes, $50,000,000.00 in Federal Income Taxes (assuming that the average worker would pay 5% of income, and that is low.) $200,000,000.00 in WC premiums if you assume that these employees worked at jobs that had 20% comp rates, (like concrete construction) All of the above totals up to:$438,000,000.00 not including all of the other items such as unpaid hospital bills etc.
Powertech Interiors, Inc.
Chief Executive Officer Mario Turcotte History Scope and Magnitude of the Problem Suggestions and Solutions