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

I

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