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A Couple of Fraud Birds

Senior Director of Strategic Alliances
LexisNexis Risk Solutions - Government

A Minnesota husband and wife have been sentenced for cheating their employees out of workers’ compensation insurance. Leroy and Joyce Mehr admitted in court to swindling their employees out of more than $300,000.

The Mehrs owned and operated a drywall company in Clearwater, MN. They mislabeled dozens of their employees as independent contractors so they would not have to pay workers’ compensation insurance premiums. In the state of Minnesota, independent contractors are required to provide and pay for their own workers’ compensation insurance.

Their construction company has been servicing offices, apartments, and homes for more than 30 years. The Mehrs’ business is now defunct, partially because of this swindling scheme. (Is this really a surprise? No one wants to hire a company associated with fraud.)

The Minneapolis Building and Construction Trades Council and the North Central States Regional Council of Carpenters condemned the impact of the Mehrs’ scheme. Workers’ Compensation fraud gives a company an unfair advantage over companies that are following the law and participating in fair competition. (The Mehrs priced projects lower because they didn’t have to pay for workers’ insurance.)

This ongoing dilemma causes employers to be faced with the choice of engaging in similarly unlawful schemes to keep their bids competitive or losing out on projects. (The majority of companies are law-abiding, but the ones who aren’t mess it up for everybody else.)

Both LeRoy and Joyce have been sentenced to six months of house detention. (How is this any different than what the rest of us are doing right now?) Along with their time under electronic home monitoring they are to serve 30 days of community service and $30,000 in fines.

The couple must also repay their insurance provider, Federated Insurance, more than $309,000 in lost premiums. (It looks like these fraudsters are free birds.)

Today’s Fraud of the Day comes from an article, “Owners of Minnesota drywall company get 6-month sentence for workers’ comp scheme,” published by Star Tribune on November 24, 2020.

A husband and wife who ran a Minnesota drywall company have been sentenced to six months of house detention for cheating their employees out of workers’ compensation insurance and pocketing more than $300,000.

LeRoy Mehr, 51, and Joyce Mehr, 50, both of Annandale, were sentenced Monday in Hennepin County District Court after pleading guilty last month to theft by swindle.

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