South Hadley Man Pleads Guilty to Defrauding Insurance Company of Workers’ Compensation Funds
NORTHAMPTON – The owner of a South Hadley roofing company pleaded guilty to charges he defrauded his insurance company of workers’ compensation premiums by misclassifying his workers on insurance policies, Attorney General Martha Coakley announced today.
Thomas Leonard, age 44, pleaded guilty to charges of Workers’ Compensation Fraud (4 counts) and Larceny over $250 (4 counts). After the plea was entered, Hampden Superior Court Judge Bertha Josephson sentenced Leonard to two and a half years in the House of Correction sentence suspended for five years with probation and ordered him to pay a $10,000 fine. Leonard was further ordered to pay $40,000 in restitution to his insurance provider.
“The defendant lied to his insurance company to save money on his workers’ compensation policies,” AG Coakley said. “Employers in the Commonwealth must provide proper insurance coverage to their employees.”
In November 2009, the Attorney General’s Office began an investigation after the matter was referred by the Massachusetts Insurance Fraud Bureau (IFB), which initially learned of Leonard’s activities from AIM Mutual Insurance Company (AIM). Leonard was the owner of TLC Exteriors (TLC), a roofing business in South Hadley. During a four year period between May 2004 through May 2008, Leonard misclassified his workers as carpenters, instead of roofers, in order to avoid paying higher workers’ compensation insurance premiums. The proper insurance premiums are calculated by the Workers’ Compensation Ratings and Inspection Bureau (WCRIB) which provides these rates based on the risk exposure of work conducted.
Leonard classified his workers as performing less risky work in order to avoid paying a higher amount of workers’ compensation insurance premium. Leonard should have paid a higher rate insurance premium based on the fact that his employees were actually roofing, which is a higher risk job classification. Leonard told his insurance company that he had a carpentry business and that any roofing was subcontracted to other businesses. IFB investigators discovered that Leonard had employed full-time roofers since his first policy with AIM in May 2004.
A Hampshire County Grand Jury returned indictments against Leonard on June 22, 2010. Leonard was arraigned on July 13, 2010, in Hampshire Superior Court at which time he entered a plea of not guilty. Leonard pleaded guilty yesterday and was sentenced.
The case was prosecuted by Assistant Attorney General Audrey Cosgrove of AG Coakley’s Insurance and Unemployment fraud Division and was investigated by the IFB.