Three Plead Guilty, Sentenced in Connection with Stealing More Than $406,000 through Fraudulent Schemes
Defendants Stole Hundreds of Thousands of Dollars in Unemployment Fraud and Larceny Schemes
WORCESTER – A Bronx, NY, man, his mother, and his former co-worker have pleaded guilty and have been sentenced in connection with stealing hundreds of thousands of dollars in unemployment benefits, Attorney General Martha Coakley announced today.
“These defendants stole hundreds of thousands of dollars from the Commonwealth and businesses through multiple schemes,” AG Coakley said. “These types of crimes are damaging to employers and put a significant strain on the state by draining resources needed to help individuals that are legitimately unemployed.”
“The successful resolution of these charges is the result of continued collaboration between the Department of Unemployment Assistance and the Attorney General,” said Secretary of Labor and Workforce Development Joanne F. Goldstein. “We will continue to identify, investigate, and prosecute suspected fraud to protect legitimate claimants, employers, and the integrity of our system.”
Elis Reyes, age 28, of Bronx, NY, his mother Teresa Cruz Colon, age 53, of Leominster, and co-worker Atia Dobson, age 33, of Fitchburg pleaded guilty in Worcester Superior Court in connection with creating false businesses and using others’ identities in order to defraud businesses and fraudulently collect unemployment benefits from the Commonwealth.
Reyes pleaded guilty to charges of Unemployment Fraud (34 counts), Larceny over $250 (32 counts), Forgery (6 counts), and Identity Fraud (6 counts). After the plea was entered, Worcester Superior Court Judge James Lemire sentenced Reyes to three to four years in state prison followed by two-and-a-half years in the House of Correction, to serve on and after his state prison sentence, suspended for five years. Reyes was further ordered to pay $80,000 of the total restitution of $406,624 in one year and sentenced to an additional five years probation. Reyes is currently being held in federal prison on an unrelated matter.
Colon pleaded guilty to charges of Unemployment Fraud (13 counts) and Receiving Stolen Property (13 counts). Dobson pleaded guilty to charges of Larceny over $250 and Identity Fraud (2 counts). The cases of Colon and Dobson were continued without a finding by Judge Lemire. The defendants were each sentenced to three years supervised probation.
The AG’s Office began an investigation in May 2010, after the matter had been initially investigated and referred by the Executive Office of Labor and Workforce Development’s Department of Unemployment Assistance (EOLWD\DUA). Reyes orchestrated three distinct unemployment fraud schemes between 2006 and 2010 in which he defrauded the state and two additional criminal schemes in which he defrauded private companies.
On October 20, 2010, a special statewide grand jury returned indictments against Reyes, Colon and Dobson. Dobson and Colon were arraigned in Worcester Superior Court on November 17, 2010, where they pleaded not guilty and were released on personal recognizance. Reyes was arraigned in Worcester Superior Court on June 20, and June 27, where he pleaded not guilty and was ordered held without bail. Reyes, Dobson, and Colon pleaded guilty and were sentenced Tuesday.
Initially, Reyes worked for a staffing company that placed temporary workers in various businesses. One of the companies that used the staffing company was a Leominster based manufacturing company that went out of business in 2006. The manufacturing company contacted the EOLWD\DUA in preparation for individuals who would apply for unemployment benefits as a result of the company’s closing. Reyes used his knowledge of the company’s situation to steal over $53,000 in unemployment benefits for employees who never worked at the manufacturing company. The checks issued by the EOLWD\DUA were deposited to bank accounts owned by individuals associated with Reyes, and his mother, Teresa Cruz Colon.
DUA investigators discovered two more schemes in which Reyes orchestrated to steal unemployment benefits. In the first scheme, Reyes created his own staffing company, Abeitus Solutions (Abeitus), which he incorporated in Leominster. Reyes registered Abeitus with the EOLWD\DUA and fraudulently obtained unemployment benefits for more than a dozen employees he claimed were terminated from his company. Based on this false information, the EOLWD\DUA paid over $228,000 in unemployment benefits to individuals who purported to work for Abeitus. Reyes had these checks sent to addresses associated with himself and his mother.
In March 2009, Reyes incorporated another staffing company, Itane Ventures (Itane), a totally fictitious company. Reyes again filed fraudulent unemployment claims for fake employees who had been laid off from Itane. As a result of these false statements, Reyes improperly received nearly $125,000 in unemployment benefits.
Reyes orchestrated two other schemes in which he stole from his former employers. Reyes and his co-worker, Dobson, stole $77,000 from a temporary staffing agency where both of them had worked. As part of the scheme, Reyes contacted the staffing company, using a false identity, and falsely requested the placement of temporary employees. The staffing company, believing that these temporary workers were actually working at a company, issued checks to these employees for their services. In reality, none of these alleged employees performed any work at all. Authorities allege that Dobson would retrieve these checks from the staffing company and give them to Reyes.
Reyes perpetrated a second similar scheme while working at another staffing company in which he placed several temporary employees in different companies, one company did not even exist, for work that was never ordered or performed. As a result of this fraudulent scheme, Reyes’ employer issued checks for these employees even though they did not exist and no work was performed. Reyes stole $5,000 from this employer based on his fraudulent actions.
The Department of Unemployment Assistance (DUA) provides temporary assistance to unemployed workers through the Unemployment Insurance (UI) program, which is funded by employer contributions. Private employers are required to pay quarterly contributions into the trust fund based on the number of workers they employ and how often their workers have accessed UI benefits, among other factors.
DUA’s Program Integrity Department focuses on the prevention, detection and the investigation of those who defraud or attempt to defraud the unemployment insurance program. Once fraud is detected, the Program Integrity Department works aggressively with the Attorney General’s office and other agencies to recover money owed to the UI Trust Fund.
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 2012, the IUFD obtained more than $1,647,000 in restitution orders in 32 matters.
To report unemployment fraud call the EOLWD/DUA’s Fraud Hotline @ 1-800-354-9927 or visit: www.mass.gov/lwd/ui-fraud anytime, 24 hours a day. Callers may remain anonymous.
The case was prosecuted by Assistant Attorneys General Stephen Adams and Jennifer Cotter, both of AG Coakley’s Insurance and Unemployment Fraud Division and was investigated by Tracey Wetterlow and Massachusetts State Police of the Attorney General’s Office and Mark St. Onge and Joshua Nussey of the EOLWD\DUA.