For Immediate Release - August 20, 2010

Worcester Company and Owner Plead Guilty, Ordered to Pay $500,000 in Restitution for Wage Law Violations, Insurance Fraud and Tax Fraud

WORCESTER - A Worcester man and his company both plead guilty in Worcester Superior Court on 65 counts of violating the Massachusetts wage and hour laws, and committing insurance and tax fraud. Tam Vuong, age 35, and his company, Labor Solutions, Inc., pled guilty to the charges and were ordered to pay $500,000 in restitution and to serve 5 years probation.

Vuong pled guilty to the charges of Willful Failure to Pay Minimum Wage (13 counts), Willful Failure to Pay Overtime (6 counts), Willful Charging a Transportation Fee That Reduces An Employee's Daily Wages Below the Minimum Wage (2 counts), Willful Failure to Provide a Pay Stub (14 counts), Willful Failure to Furnish Employment Records to the Attorney General, Workers' Compensation Insurance Fraud (5 counts), Unemployment Insurance Fraud (5 counts), Failure to Make Unemployment Insurance Contributions (5 counts); Larceny by False Pretenses Over $250, Willful Failure to File a Tax Return (5 counts) and Willful Aiding or Assisting in the Presentation of Fraudulent Tax Documents (2 counts). Vuong's company pled guilty to the charge of Willful Failure to Provide a Pay Stub (6 counts).

The Commonwealth recommended that Vuong serve a three to five year jail sentence and that he and his company pay $1.3 million in restitution.

"We hope this plea will help discourage employers from violating the law. We will continue to enforce the wage and hour laws to ensure workers are protected and law abiding businesses are not undercut by other businesses that violate the law," AG Coakley said.

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. 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. 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. Further, many workers were illegally charged approximately $2.00 - $3.00 per day for transportation, thereby reducing their wages below the minimum wage. Affected workers also received no paystub.

Labor Solutions operated mainly on a cash basis, and from 2004 through 2008 the company collected over $24 million from the client companies where the temporary employees worked, while paying out approximately $15 million in cash wages. Authorities believe that hundreds of workers were affected by Labor Solution's illegal practices. The company failed to disclose this $15 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. 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.

On September 23, 2009, a Worcester County Grand Jury returned indictments against Vuong and his company. They were arraigned in Worcester Superior Court on October 1, 2009, where they entered a plea of not guilty and Vuong was released on personal recognizance. Yesterday, Vuong and Labor Solutions pled guilty to all charges and were sentenced.

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 was 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. Assistance to the employees was provided by Victim Witness Advocate Ashley Cinelli. Roger Murphy, Revenue Enforcement Supervisor, of Division of Unemployment Assistance/EOLWD, Thomas Nowicki, Chief Investigator, of Department of Revenue/ANF, Jeffrey Ambrose, Investigator, for the IFB also investigated this case.

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