Mass. Biz Owner Charged in Connection With Workers’ Comp Fraud

March 20, 2014

Massachusetts Attorney General’s office announced a Lowell, Mass., businessman has been indicted on charges he failed to accurately report his total payroll and number of employees and understated the number of jobs associated with his business to avoid paying thousands of dollars in insurance premiums.

“Premium avoidance undermines the insurance system and puts lawful employers at a disadvantage,” Massachusetts Attorney General Martha Coakley said in a statement. “The prosecution of these schemes prevents the increase in insurance premiums that often results from these crimes.”

Officials said Kruy Kroch was indicted on charges of workers’ compensation fraud (5 counts) and larceny over $250 (5 counts). Kroch is the owner and operator of MK Environmental, Inc., an asbestos abatement company located in Lowell, Mass.

According to authorities MK Environmental was insured by Travelers Indemnity Company for workers’ compensation insurance and employers liability insurance from April 2007 through December 2012. In an effort to evade high insurance premiums, Kroch allegedly misrepresented to his insurance company the true number of employees, payroll, and understated the number of jobs performed by his business.

Based on his reporting, Kroch was granted the minimum premium rate on his policy. As a result of this alleged scheme, authorities said, Kroch put Travelers unknowingly at risk to cover any undisclosed employees for injuries that occurred or may have occurred during the policy periods.

According to authorities, and contrary to reports made to his insurance provider, MK Environmental employed up to 30 workers with at least four full-time between 2007 and 2012 and allegedly misclassified the work of his company during the same period. As a result of this alleged premium avoidance scheme, Kroch underpaid his workers’ compensation insurer thousands of dollars in premium payments, officials said.

A statewide grand jury returned indictments against Kroch. He is scheduled to be arraigned in Middlesex Superior Court at a later date.

Source: Massachusetts Attorney General’s office

 

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