Fair Share

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
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.