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Construction worker has an accident while working

Workers compensation insurance is expensive, but necessary. It protects injured workers by providing medical care and helps pay the bills until they can get back on their feet. It also protects employers from being sued, which could ultimately result in the loss of their business. (Sounds like a win-win, right? Pay the insurance premium and you get instant protection for your employees and your business.) The owner of a Malden, Mass., area cleaning company lost in a big way when he avoided paying $74,000 in insurance premiums in a workers’ compensation fraud scheme where he misclassified the amount of his payroll.

The owner of M&M Cleaning thought that if he misclassified the number of workers on his payroll, his overall costs would decrease. By falsifying the payroll amount, he avoided paying his fair share of unemployment insurance, payroll taxes and workers compensation insurance premiums.

Over six years, Marcello Pompa, 41, of Saugus, claimed he employed three subcontractors to service his customers. (This allowed him to lower his workers’ compensation insurance premiums and conceal that he had a payroll worth $2.8 million.)

Lying about his payroll also gave him an unfair advantage when competing for new business because he could keep his costs lower than the competition. (In fact, he won multiple contracts throughout Massachusetts by bidding lower than his competitors. Not fair!)

 Pompa pleaded guilty to five counts of workers’ compensation insurance fraud and larceny over $250. (While he avoided paying his insurance premiums, he was not able to avoid a jail sentence.) He received a sentence of one year in a House of Correction with six months to be served. The remaining balance was suspended for two years. He is also prohibited to work on municipal contracts and will not be allowed to bid on any for two years. He also owes $74,000 in restitution. (Lesson learned? It would have been cheaper to pay for the insurance.)

 Today’s “Fraud of the Day” is based on an article,Cleaning Company Owner Pleads Guilty, Sentenced to Jail for Insurance Fraud,” posted on WorkersCompensation.com on October 28, 2019.

Woburn,MA (WorkersCompensation.com) — The owner of a Malden-based cleaning company pleaded guilty and was sentenced to jail in connection with an insurance fraud scheme that involved worker misclassification, Attorney General Maura Healey announced today.

Marcello Pompa, age 41, of Saugus, pleaded guilty on Monday to Workers Compensation Insurance Fraud (5 counts) and Larceny Over $250 (5 counts). He was sentenced by Judge Laurence Pierce to one year in a House of Correction with six months to be served, with the remaining balance suspended for two years. He was also ordered to not work on municipal contracts or participate in the municipal bidding process for two years, and to pay $74,000 in restitution.

 

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Larry Benson, Senior Director of Strategic Alliances, LexisNexis Risk Solutions - Government

Larry Benson is responsible for developing strategic partnerships and solutions for the government vertical. His expertise focuses on how government programs are defrauded by criminal groups, and the approaches necessary to prevent them from succeeding.

Mr. Benson has 30 years of experience in sales and business development. Before joining LexisNexis® Risk Solutions, he spent 12 years founding and managing two software technology startups. During the 1990s he spent 10 years as a Regional Director helping to grow a New England-based technology company from 300 employees to 7,000. He started his career with Martin Marietta Aerospace working on laser guided weapons and day/night vision systems.

A sought-after speaker and accomplished writer, Mr. Benson is the principal author of “Fraud of the Day,” a website dedicated to educating government officials about how criminals are defrauding government programs. He has co-authored WTF? Where’s the Fraud? How to Unmask and Stop Identity Fraud’s Drain on Our Government, and Data Personified, How Fraud is Changing the Meaning of Identity.

Benson holds a Bachelor of Science in Physics from Albright College, and earned two graduate degrees – a Master of Business Administration from Florida Institute of Technology, and a Master of Science in Engineering from Lehigh University.