Holliston Man and His Business Indicted on Insurance Fraud Charges
The Insurance Fraud Bureau of Massachusetts (IFB) referred this case to the Attorney General's Office in September 2008 after an investigation into the company's payroll and an insurance claim filed by an M&M employee who was allegedly not on the company payroll. According to authorities, McKunes and M&M purchased workers' compensation insurance from Atlantic Charter Insurance Company (Atlantic) for the policy years from September 2002 to September 2005. Authorities allege that in an effort to obtain a lower workers' compensation premium, McKunes and M&M underreported its actual payroll by not reporting payments to undisclosed employees and not reporting overtime compensation. Gross payroll (whether by cash or check) is an integral component in the calculation of a workers' compensation policy premium. According to authorities, this matter was referred to IFB for investigation after an auditor from Atlantic discovered corporate tax returns filed by McKunes and M&M for nearly $400,000 in payments to subcontractors, which were not disclosed in the premium audit. As a result of this alleged premium avoidance scheme, McKunes and M&M underpaid its workers' compensation insurer a total of $51,850 in premium payments.
Authorities further allege that by underreporting its payroll to its payroll administrator during the relevant dates, McKunes and M&M underpaid the Executive Office of Labor and Workforce Development's Division of Unemployment Assistance (EOLWD\DUA) in the amount of $23,769 of unpaid assessments and failed to withhold over $40,405 in state income taxes to the Department of Revenue (DOR).
A Middlesex Grand Jury returned indictments against McKunes and M&M yesterday. Mckunes and M&M are scheduled to be arraigned on July 16, 2009, in Middlesex Superior Court.
Assistant Attorney General Michael J. Walsh of Attorney General Martha Coakley's Insurance and Unemployment Fraud Division is prosecuting this case with assistance from the IFB.