Two Businesses Indicted on Charges of Failing to Pay into Unemployment Trust Fund
AG’s Office Alleges Businesses Failed to Pay More Than $443,000 in Tax Contributions to Department of Unemployment Assistance
BOSTON – Two businesses and their owners have been indicted in connection with failing to pay more than $443,000 into the Commonwealth’s unemployment trust fund, Attorney General Martha Coakley announced today. The cases are the result of investigations referred to the Attorney General’s Office by the Executive Office of Labor and Workforce Development’s Department of Unemployment Assistance (EOLWD\DUA) in a collaborative effort to target employers that fail to pay their quarterly unemployment contributions.
“Qualifying employers are required to pay contributions to the unemployment compensation fund in Massachusetts to ensure that benefits are available for eligible workers,” AG Coakley said. “Failure to pay these contributions puts a greater strain on the unemployment system. Our enforcement effort aims to level the playing field for those businesses that already follow the law and assure compliance in the future.”
The Department of Unemployment Assistance (DUA) administers the Unemployment Insurance program, providing temporary assistance to unemployed workers. Funding for these benefits comes from Massachusetts employers. Employers either pay quarterly contributions into the trust fund or non-profit or governmental employers have the option to self-insure, reimbursing the state dollar-for-dollar for benefits paid.
“We are partnering across agencies and with Attorney General Coakley to combat this type of fraud,” said Joanne F. Goldstein, Massachusetts Secretary of Labor & Workforce Development. “Businesses deserve a level playing field, and by bringing these cases to light, we are helping legitimate businesses and tax payers alike.”
A Suffolk County Grand Jury returned indictments against Daniel Reitzas, his companies Northeast Knitting and Nemdigelt, and John Capello and his company, Ieraci Landscaping, Inc. on the charge of Non-Payment of Employer Contributions. According to authorities, workers formerly employed by the defendants legitimately collected unemployment benefits despite their employers’ failure to pay contributions into the Massachusetts unemployment trust fund. The defendants are charged as follows:
Daniel Reitzas, age 42, of Fall River is charged with Non-Payment of Employer Contributions (22 counts). His businesses, Northeast Knitting and Nemdigelt, have also each been charged with Non-Payment of Employer Contributions (11 counts).
According to authorities, Reitzas has been the president and treasurer of Northeast Knitting, a knitwear company incorporated in 1990, since 2004. Authorities allege that although the company had previously complied with its employer tax contributions, it stopped paying the necessary taxes beginning in the third quarter of 2006 through 2009. During this time period, the company continued to operate and pay wages to its laborers.
In 2009, Reitzas, also the president of Nemdigelt Corporation, a machinery equipment company incorporated in 1990, changed the name of Northeast Knitting to Nemdigelt. Authorities allege that following the name change, Nemdigelt failed to make proper contributions to EOLWD\DUA from the second quarter of 2009 through 2011. As a result of the alleged fraud, Reitzas, Northeast Knitting and Nemdigelt failed to pay approximately $333,724 in employer contributions.
A Suffolk County Grand Jury returned indictments against Reitzas, Northeast Knitting and Nemdigelt on March 22, 2012. The defendants are scheduled for arraignment in Suffolk Superior Court on April 24, 2012.
John Capello, age 42, of Waltham, and his company, Ieraci Landscaping, Inc. (Ieraci), are each charged with Non-Payment of Employer Contributions (16 counts).
According to authorities, Capello is the president, secretary, treasurer, director and resident agent of Ieraci, a Newtonville landscaping company incorporated in 1997. Authorities allege that beginning in the second quarter of 2006 and occurring at various times through December 2011, Capello and Ieraci failed to pay employer tax contributions. As a result of the alleged fraud, Capello and Ieraci failed to pay $110,000 in employer contributions.
A Suffolk County Grand Jury returned indictments against Capello and Ieraci on March 26, 2012. The defendants are also scheduled for arraignment in Suffolk Superior Court on April 24, 2012.
AG Coakley’s Insurance and Unemployment Fraud Division works to protect consumers and the integrity of the insurance system by investigating and prosecuting those who commit fraud against all types of insurers, including the Commonwealth’s unemployment insurance and workers’ compensation system. The prosecution of insurance fraud helps prevent the increase in premiums and taxes that are the result of fraudulent insurance claims. In 2011, the Insurance and Unemployment Fraud Division obtained $5,578,934 in restitution orders in 33 matters.
To report unemployment fraud to the EOLWD\DUA, call the agency’s toll free fraud hotline at 1-800-354-9927 anytime, 24 hours a day. Callers may remain anonymous.
The cases are being prosecuted by Assistant Attorneys General Audrey Cosgrove, and Stephen Adams of AG Coakley’s Insurance and Unemployment Fraud Division with assistance from investigators Christopher Gabriel and Rose Bagalawis the Attorney General’s Office and Richard Carney, Director of Revenue Enforcement and Audit, from EOLWD\DUA.