Two Businesses, Owners Charged with Fraud Against New York State Insurance Fund

January 5, 2021

Two businesses and their owners have been charged with fraud against the New York State Insurance Fund (NYSIF).

Manuel Sanchez and his business Lagos Construction have been charged with grand larceny and other crimes for allegedly failing to pay insurance premiums of more than $2 million for workers’ compensation insurance covering employees.

A second business owner, Rosa Rodriguez, and her company, Encinos Construction, have also been charged with grand larceny for allegedly concealing $3 million in revenue during their audits with NYSIF and allegedly defrauding the fund of more than $460,000 in insurance premiums.

“Employees depend on the worker’s compensation insurance for their much-needed wages and medical care when they are injured on the job,” said Queens District Attorney Melinda Katz in a press release issued by her office. “This is a promise that must be kept to our hardworking labor force. These two employers allegedly pocketed money that should have helped fund the insurance program. This is unacceptable.”

Sanchez and his business were arraigned before Queens Criminal Court Judge Scott Dunn on a complaint charging them with grand larceny in the first degree, insurance fraud in the first degree, falsifying business records in the first degree, offering a false instrument for filing in the first degree and fraudulent practice. Judge Dunn ordered Sanchez to return to court on March 3, 2021. If convicted, Sanchez faces more than eight up to 25 years in prison.

According to the charges, Lagos Construction was a policyholder with NYSIF, which provided workers’ compensation benefits for the business’ employees. Between April 2014 and April 2018, NYSIF conducted four audits on Lagos Construction’s business records to verify the appropriate amount Lagos should pay in premiums to the fund. The audits included a review of the company’s checkbooks, banks statements, contracts, tax returns, unemployment insurance reports and other documents.

It is alleged that Sanchez and the business falsified records and underreported the amount of business conducted in order to avoid paying $2.2 million in insurance premiums.

Rodriguez and her company were arraigned before Queens Criminal Court Judge Eugene Guarino on a complaint charging them with grand larceny in the second degree, insurance fraud in the second degree, falsifying business records in the first degree, offering a false instrument for filing in the first degree and fraudulent practices. Judge Guarino order Rodriguez to return to Court on March 3, 2021. If convicted, Rodriguez faces between five to 15 years in prison.

According to the charges, an audit of Encinos Construction’s books and records from October 2015 through August 2017 allegedly showed Rodriguez and her company concealed revenue totaling $3 million and therefore defrauded NYSIF of more than $460,000 plus interest in insurance premiums.

“Instead of doing the right thing to provide hard-earned benefits to employees during this difficult time, these two employers allegedly pursued insurance fraud for their own benefit,” said New York State Department of Financial Services (DFS) Superintendent Linda Lacewell in the release. “Insurance fraud not only hits the bottom line of insurance companies, it also hits the pocketbooks of consumers through higher premiums.”

The investigation was conducted by investigators with NYSIF, DFS and the New York State Inspector General’s Office. Criminal complaints and indictments are accusations. A defendant is presumed innocent until proven guilty.

Source: Queens County District Attorney’s Office

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