Attorney General Martha Coakley's Office Announces Indictments Against Worcester Company and Owner for Wage Law Violations, Insurance Fraud and Tax Fraud
Authorities began an investigation into Vuong and his company in April 2008, after various members of the Governor's Joint Enforcement Task Force on the Underground Economy and Employee Misclassification (Task Force) received complaints alleging that Labor Solutions was violating the Massachusetts wage and hour laws, including failing to pay the mandatory minimum wage. Investigators discovered that a substantial number of employees, all of whom were paid in cash, were not paid the statutory minimum wage or overtime rates in accordance with Massachusetts law for the period of September 2007 to September 2009. Many workers received $6.25 or $6.50 per hour; however, the statutory minimum wage was $7.50 in 2007, and later raised to $8.00 per hour as of January 1, 2008. Authorities also allege that a significant number of employees failed to receive overtime pay at one and a half times their regular wage rate for hours worked over 40 in a week. Investigators also discovered that many workers were illegally charged approximately $2.00 - $3.00 per day for transportation, thereby reducing their wages below the minimum wage. Authorities also allege that the affected workers received no paystub.
Investigators discovered that Labor Solutions operated mainly on a cash basis, and from 2004 through 2008 the company collected over $20 million by providing temporary employees to client companies, while paying out approximately $11 million in cash wages. Authorities believe that hundreds of workers were affected by Labor Solution's illegal practices. The company allegedly failed to disclose this $11 million cash payroll to its workers' compensation carrier, as well as to the Massachusetts Department of Revenue (DOR) for purposes of unemployment insurance contributions and corporate excise tax filings. Authorities allege that the company also never filed a corporate tax return while it was incorporated for the years of 2002 through 2007.
Investigators estimate that the loss to the Commonwealth as a result of the unemployment insurance fraud to be over $655,000. The loss to the workers compensation insurance carrier, Traveler's Insurance Co., Inc., is estimated to be at least $509,000 in unpaid insurance premiums.
Labor Solutions provided temporary labor services to various light manufacturing facilities around Worcester County.
A Worcester County Grand Jury returned indictments against Vuong and his company today. They are expected to be arraigned in Worcester Superior Court at a later date.
The goal of the Governor's Task Force is to reduce fraudulent employment practices in the state, and to increase fair business competition by leveling the playing field for those companies which follow the law. The Task Force includes, among other agencies, the Attorney General's Fair Labor Division, the Executive Office of Labor and Workforce Development (EOLWD), Department of Labor/EOLWD, Division of Unemployment Assistance/EOLWD, the Department of Industrial Accidents/EOLWD, the Division of Occupational Safety/EOLWD, the Executive Office of Administration and Finance's (ANF) Department of Revenue/ANF, and the Massachusetts Insurance Fraud Bureau (IFB).
Workers who believe their workplace rights have been violated are strongly urged to call the Attorney General's Fair Labor Hotline at (617) 727-3465 or the Joint Task Force hotline toll-free at 1-(877) 96-LABOR (877-965-2267). All reporting will remain anonymous. More information about the wage and hour laws is also available in multiple languages at the Attorney General's Workplace Rights website: www.massworkrights.com. Additional information about the Joint Task Force's efforts to combat workplace fraud can be found at www.mass.gov/dol/labortaskforce.
The case is being prosecuted by Assistant Attorney General Matthew Shea, of Attorney General Coakley's Criminal Bureau, and Assistant Attorney General Kate J. Fitzpatrick, of Attorney General Coakley's Fair Labor Division. The case was investigated by Deputy Chief of Investigations Greg Reutlinger, Inspector Elizabete Valadao, Inspector Nuno Montrond, and Inspector Leah Turney, all of Attorney General Coakley's Fair Labor Division. Roger Murphy, Revenue Enforcement Supervisor, of Division of Unemployment Assistance/EOLWD, Thomas Nowicki, Chief Investigator, of Department of Revenue/ANF, Jeffrey Ambrose, Investigator, and Corissa Angelo, Analyst, for the IFB also investigated this case.