Lawrence Asbestos Removal Company and owner Plead Guilty, Sentenced for Workers' Compensation Fraud, Tax Evasion and Larceny
Regina Guzman, age 36, of Pawtucket, Rhode Island, and her company AG Asbestos, both pled guilty in Essex Superior Court yesterday to charges of Unemployment Tax Evasion (4 counts), Workers' Compensation Fraud and Larceny by False Pretenses over $250. Following the change of plea, Superior Court Judge David A. Lowy sentenced Guzman to serve eight years probation and ordered her to pay $209,000 in restitution. Judge Lowy also ordered that AG Asbestos pay a total of $600 in fines.
"Employers in Massachusetts have an obligation to ensure that their employees are properly protected and insured while on the job," AG Coakley said. "Our office will hold accountable those who knowingly violate the law, and we are pleased that the court ordered restitution in this case."
Investigators discovered that Guzman and AG Asbestos misrepresented the company's payroll in 2003 by approximately $1.3 million. An investigation conducted by the Attorney General's Fair Labor Division in November 2004 found that during the company's annual worker's compensation audit in February of 2004, Guzman provided documentation to its worker's compensation insurance carrier, AIM Mutual Insurance, Inc., indicating that the company's payroll was only $223,809. Investigators from the Attorney General's Fair Labor Division obtained copies of all payroll checks the company had issued to its employees. AG Asbestos' true payroll for 2003 was $1.6 million. This misrepresentation reduced their worker's compensation insurance premium, which resulted in defrauding AIM Mutual Insurance by $138,000. Guzman directed employees of AG Asbestos to cash their paychecks for a fee at a Lawrence liquor store. AG Asbestos then bought back the paychecks from the store for 102% of their value. Of the nearly 5,000 paychecks totaling $1.6 million in payroll for 2003 year, none were processed through a banking institution.
In addition, AG Asbestos underreported its quarterly payroll to the Division of Unemployment Assistance. This misrepresentation allowed AG Asbestos to reduce its tax liability in 2003 by $71,000.
An Essex County Grand Jury returned indictments against both Guzman and AG Asbestos on July 27, 2007. Both were arraigned in Essex Superior Court on August 13, 2007, where they entered pleas of not guilty and were released on personal recognizance. Yesterday, both Guzman and her company pled guilty and were sentenced.
The case was prosecuted by Assistant Attorney General Miranda S. Jones, and was investigated by Deputy Chief of Investigations Greg Reutlinger, both of AG Coakley's Fair Labor Division. Representatives from the Insurance Fraud Bureau of Massachusetts also assisted with the investigation.