For Immediate Release - March 13, 2014

Lowell Business Owner Charged in Connection with Workers’ Compensation Fraud

Alleged Scheme Resulted in Thousands of Dollars in Fraud

BOSTON – A Lowell businessman has been indicted on charges he failed to accurately report his total payroll and number of employees and under-stated the number of jobs associated with his business to avoid paying thousands of dollars in insurance premiums, Attorney General Martha Coakley announced today.

“Premium avoidance undermines the insurance system and puts lawful employers at a disadvantage,” AG Coakley said. “The prosecution of these schemes prevents the increase in insurance premiums that often results from these crimes.”

Kruy Kroch, 50, was indicted on charges of Workers’ Compensation Fraud (5 counts) and Larceny Over $250 (5 counts). 

Kroch is the owner and operator of MK Environmental, Inc., an asbestos abatement company located in Lowell.

According to authorities MK Environmental was insured by Travelers Indemnity Company for Workers Compensation Insurance and Employers Liability Insurance from April 2007 through December 2012. In an effort to evade high insurance premiums, Kroch allegedly misrepresented to his insurance company the true number of employees, payroll, and under-stated the number of jobs performed by his business.

Based on his reporting, Kroch was granted the minimum premium rate on his policy. As a result of this alleged scheme, Kroch put Travelers unknowingly at risk to cover any undisclosed employees for injuries that occurred or may have occurred during the policy periods.    

According to authorities, and contrary to reports made to his insurance provider, MK Environmental employed up to 30 workers with at least four full-time between 2007 and 2012 and misclassified the work of his company during the same period. As a result of this premium avoidance scheme, Kroch underpaid his workers’ compensation insurer thousands of dollars in premium payments. 

A Statewide Grand Jury returned indictments against Kroch today. Kroch is scheduled to be arraigned in Middlesex Superior Court at a later date.

The Insurance Fraud Bureau of Massachusetts (IFB) referred this case to the Attorney General’s Office after an investigation into reports that the company was committing insurance fraud.

In 2013, AG Coakley’s Insurance and Unemployment Fraud Division (IUFD) recovered more than $1.4 million in restitution for the state. The IUFD 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 systems. 

Assistant Attorney General Joshua Pakstis of Attorney General Martha Coakley’s Insurance and Unemployment Fraud Division is prosecuting this case with assistance investigator Phyl Mantyla of the Attorney General’s Office and investigators from the IFB.

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