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Fraud expert, Linda Webb, was in attendance at the unveiling of ‘Operation Dirty Money’, a joint task force operation that shut down a workers’ compensation fraud check cashing scheme taking place in South Florida. Webb, President of Contego Services Group, LLC, was asked to be recognized at the event for Contego Services Group’s involvement in the task force that helped to make yesterday’s sting operation possible.

Webb has said, “I am honored that Contego was invited to today’s task force operation in matters for which one of Contego’s clients, Guarantee Insurance Company were victimized.  Combatting the increased prevalence of fraud in our community is the core of our corporate mission.”

Investigators say Hugo Rodriguez, the ringleader, allegedly funneled more than $70 million through shell construction companies to avoid paying workers’ compensation coverage. In court, his bond was set at more than half a million dollars. The corruption has extended into cash payments to workers to avoid contributing to the state’s tax base which benefits Florida’s economy.

“Fraudulent acts not only costs the people of Florida millions of dollars in revenue, but promotes a culture of distrust throughout the business community, and depressing job growth when it is most needed,” says Linda Webb. She went on to say, “We are in a zero tolerance business. Fraud harms our customers, our friends, our family, and our nation. We are committed, along with every organization represented here today, to spread the word about the costs presented by this often overlooked yet very serious social issue.”

To see The Fraud Dog speak at the press conference click here.

To read the state’s official press release on ‘Operation Dirty Money’, please see below.

 

For Immediate Release:                                                                    Contact: Alexis Lambert

July 27, 2012                                                                                                   (850) 413-2842

CFO Jeff Atwater and Broward Sheriff Al Lamberti Announce Arrests in
`Operation Dirty Money,’ Workers’ Comp Fraud Check Cashing Scheme

TALLAHASSEE — Florida Chief Financial Officer Jeff Atwater and Broward Sheriff Al Lamberti today announced multiple arrests in “Operation Dirty Money,” an investigation conducted by the recently formed Workers’ Compensation Fraud Task Force, which has to date netted more than $140 million in fraudulent transactions associated with 12 shell companies. The task force, created jointly by the Florida Department of Financial Services’ Division of Insurance Fraud (DIF) and the Broward Sheriff’s Office (BSO), charged eight individuals with workers’ compensation fraud and money laundering for their involvement in a large scale check cashing scheme evading the cost of workers’ compensation coverage.

“This kind of fraud is diverting nearly $1 billion from Florida’s economy annually and is putting honest small businesses and employees at risk,” CFO Atwater said. “I am proud of the diligent efforts of my insurance fraud detectives, Sheriff Lamberti and his team here at the Broward Sheriff’s Office, and the prosecutors who have come together to make this joint fraud task force a success.”

“Through collaborative efforts between BSO and our state law enforcement partners in the Workers’ Compensation Fraud Task Force, we were able to shut down a prolific criminal enterprise,” Sheriff Lamberti said. “Now we will be able to use the illegal funds seized from the bad guys, through our Law Enforcement Trust Fund, and give it to the good guys.”

“I am grateful to all of the partnering agencies who have brought down a workers’ compensation fraud ring. My Office of Statewide Prosecution will prosecute these individuals and ensure that justice is served,” Attorney General Pam Bondi said. “I congratulate the Workers’ Compensation Fraud Task Force for a job well done.”

During the joint investigation it was revealed that Hugo Rodriguez, owner of the Oto Group, Inc., was the “ring leader” of seven individuals and the facilitator of 10 known shell companies that funneled in excess of $70 million in undeclared and undetected payroll through different money service businesses. By using shell companies, Rodriguez was able to run a large construction operation and avoid paying the cost of workers’ compensation coverage, leaving employees at risk and scamming legitimate businesses.

K & N Food Corp., a licensed money service business in Palm Beach County owned by Nilbala and Kanti Patel, was the first one used by Rodriguez and his associates. The Patels are set to enter into plea agreements with Attorney General Pam Bondi’s Office of Statewide Prosecution, and have agreed to the immediate forfeiture of over $490,000 in illicit proceeds seized during the search of their business in September of 2011.

 

Arrests of these individuals were made in multiple counties including Broward, Miami-Dade, Palm Beach and Polk counties. Attorney General Bondi’s Office of Statewide Prosecution and Miami-Dade State Attorney Katherine Fernandez-Rundle will prosecute the arrested individuals.

CFO Atwater convened a work group in August 2011 to review the practices of certain bad actors in the check cashing services industry who were aiding in complex workers’

compensation premium fraud scheme such as this one. The work group released its report (http://www.myfloridacfo.com/siteDocs/MoneyServiceBusiness/WC MSBReport-Rec.pdf)in November, recommending reforms to combat this scheme to the Legislature. Championed by Sen. Thrasher and Rep. Davis during the 2012 Legislative Session, reforms equipped regulators and law enforcement officials with critical tools including the ability to make unannounced examinations and outlawing the possession of thumbprint stamps or other items used to forge payment authorization. New provisions are helping detect workers’ compensation insurance fraud more quickly, protecting the honest players in the marketplace while ensuring those responsible for diverting more than a billion dollars from Florida’s economy are caught and held accountable.

The Workers’ Compensation Fraud Task Force was jointly created by the CFO Atwater’s Division of Insurance Fraud and Sheriff Lamberti’s in August of 2011. Through joint efforts, the task force has been able to successfully shut down 12 shell companies and identify $140 million in fraudulent transactions associated with these companies.

Anyone with information about these or any other incidents of suspected insurance fraud is asked to call 1-800-378-0445. Citizens who provide tips can remain anonymous. The Department of Financial Services to date has awarded almost $275,000 to more than 40 citizens as part of its Anti-Fraud Reward Program. The program rewards individuals up to $25,000 for information that directly leads to an arrest and conviction in an insurance fraud scheme.

###

Chief Financial Officer Jeff Atwater, a statewide elected official, oversees the Department of
Financial Services. CFO Atwater ‘s priorities include fighting financial fraud, abuse and waste
in government, reducing government spending and regulatory burdens that chase away
businesses, and providing transparency and accountability in spending.

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