False Economy

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High Angle View Of A Person With Fractured Hand Filling Health Insurance Form

Being thrifty is a good thing; being so cheap you cheat your employees and scheme to avoid spending on insurance premiums is not. For about three years, Man Tat Szeto, the owner of MT Szeto Construction in California, underreported employees and injuries to avoid about $86,000 in workers compensation premiums. (Crossing the line from cheap to greedy and fraudulent.)

When employees became injured on the job, Szeto would pay the workers in cash rather than letting them make workers compensation claims—and then fire them, all for fear that any claims would increase the company’s insurance premiums. He then used the banking system to launder the cash payments to the workers. He also paid workers for 40 hours of work even when requiring them to work 70 hours a week. (There you go, incentivize your employees to turn you in.) 

Szeto pleaded guilty to workers compensation insurance fraud, unemployment insurance fraud, and money laundering. In May 2021, he was sentenced to nine months in county jail. (He’ll presumably enjoy the free room and board.) He must also serve five years of probation and pay $250K in restitution for his frauds. (I’m pretty sure he’s not loving that restitution part.)

Today’s Fraud of the Day comes from a Mercury News article, “Bay Area construction firm owner pleads guilty to workers comp fraud,”  dated May 5, 2021.

SAN JOSE – The owner of a Bay Area construction company faces nine months in jail for firing workers after they requested medical treatment for work-related injuries, prosecutors said.

Man Tat Szeto, the proprietor of MT Szeto Construction, pleaded guilty to workers compensation insurance fraud, unemployment insurance tax fraud and money laundering, the Santa Clara County District Attorney’s Office said in a statement Wednesday.

 

 

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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.