Unlicensed Labor Broker Indicted in New York for $1M Insurance Fraud Scheme

September 9, 2019

Unlicensed labor broker Salvador Almonte Jr. and insurance broker Steven Asvazadourian have been indicted in New York for an insurance fraud scheme in which they underreported the size of Almonte’s companies and lied to insurance carriers about the work being performed by his employees in order to evade more than $1 million in insurance premiums. This scheme left more than a hundred construction workers underinsured.

The defendants are charged in a seven-count New York State Supreme Court indictment with insurance fraud in the first degree, scheme to defraud in the first degree, criminal possession of a forged instrument in the second degree, offering a false instrument for filing in the first degree and fraudulent practices in violation of workers’ compensation law.

“These defendants scammed insurance companies to cut costs in one of the city’s most dangerous industries with utter disregard for their employees’ lives,” said Manhattan District Attorney Cyrus R. Vance Jr. in a press release issued by his office. “When his workers were injured on the job, Salvador Almonte refused to cooperate with the Workers’ Compensation Board, choosing to leave his employees without access to medical treatment or disability pay in a failed effort to keep his scheme under wraps.”

According to court documents and statements made on the record in court, Almonte is an unlicensed labor broker who operates a multi-million dollar construction labor supply business in New York City and the surrounding area. His companies – including Power Services Solutions LLC, Power Services of New York Inc., South Side Services Inc., and North Star Strategy Inc. – provide workers to construction companies engaged in high-rise superstructure projects. As part of his services, Almonte is required to show proof that he has a valid workers’ compensation insurance policy to cover his workforce.

In January 2015, Almonte began an insurance fraud scheme in which he made false representations to five different insurance carriers, including the New York State Insurance Fund, to secure workers’ compensation insurance coverage at fraudulently reduced prices.

With the help of Asvazadourian and his insurance brokerage, the Dorian Agency Ltd., Almonte evaded more than $1 million in premiums from the New York State Insurance Fund alone.

Workers’ compensation insurance premiums are based on a company’s annual payroll and the risk involved in the type of work done by its employees. A larger company engaged in more dangerous work, such as a construction company erecting high-rise buildings, has a workforce that is more expensive to insure, the press release stated.

In order to secure cheaper rates, Almonte and asvazadourian falsely told insurance companies that they were providing coverage for a handful of cleaners or interior carpenters, misleading the insurance carriers about the true size and work performed by Almonte’s workforce.

Once a form of coverage was established for Almonte’s businesses, or even when no coverage was in place, Asvazadourian and other employees of the Dorian Agency generated fraudulent certificates of insurance, which Almonte sent to his clients as proof that he had adequate workers’ compensation insurance to cover the construction workers he provided.

Over the past four years, more than a dozen of Almonte’s workers have been injured on the job. In one case, construction worker Juan Chonillo died on a construction site operated by SSC High Rise Inc., which at various times used Almonte’s labor supply services. In July 2018, the company pleaded guilty to Manslaughter in the Second Degree for causing Chonillo’s death.

Many of the injured workers submitted claims to the New York State Workers’ Compensation Board after their work-related injuries. In order to hide the insurance fraud scheme, Almonte refused to cooperate with the board when notified to appear. His refusal to acknowledge that he was the employer of injured workers impeded the board’s efforts to assign insurance coverage to these workers, including two who faced extensive delays in receiving disability pay.

One of these workers suffered significant injuries when he fell ten feet on a construction site and landed on top of an exposed piece of capped metal rebar. This worker spent months unable to complete necessary medical treatment and had to wait almost a year for disability payments that should have been paid to him following his injuries, the press release stated.

A second employee, who had to leave his job after suffering a head injury when he was struck by a large piece of wood, waited more than 14 months for disability pay while the board attempted to determine the identity of his employer in order to establish the responsible insurer carrier, the release added.

Over the last three years, the Manhattan District Attorney’s Office has returned $7.4 million in stolen wages to workers and more than $14 million in unpaid taxes from 104 construction companies to New York State, Vance added in the release.

“As the New York State construction boom continues, today’s indictments serve as a warning that companies cannot evade criminal prosecution for workers’ compensation fraud,” said New York State Inspector General Letizia Tagliafierro in the release.

The charges contained in the indictment are merely allegations, and the defendants are presumed innocent unless and until proven guilty. All factual recitations are derived from documents filed in court and statements made on the record in court.

Source: Manhattan District Attorney’s Office

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