North Carolina’s first criminal case involving a professional employer organization that provides outsourced personnel services to other businesses has been resolved by the Department of Insurance.
Insurance Commissioner Jim Long announced that Hardin Ross, of Winston Salem, pleaded guilty to three counts of mail fraud in a plea agreement that stemmed from a case involving his PEO, Outsource Leasing of Winston Salem. Ross was sentenced to 19 months in federal prison and nine years supervised probation, and was ordered to pay nearly $139,000 in restitution.
Ross, who was investigated by Department of Insurance law enforcement, is accused of a common type of fraud in the PEO industry. Ross allegedly leased employees to client companies and charged those client companies for providing workers compensation coverage to the employees. He allegedly failed to provide the coverage, however, and defrauded six companies of approximately $139,000.
For some time, the Department of Insurance has monitored the PEO industry for this type of fraud, which often varies between falsely charging for workers comp coverage and/or health insurance benefits. At least five other criminal cases are open in the Department’s Investigations Division.
PEOs are a growing business in North Carolina. Filings show these companies provide personnel services to about 1,525 client companies. The national average client company size is 15 employees.
“As this industry changes and grows, and as we work out the wrinkles of a newly-licensed industry, we will continue to watch carefully for signs of PEO fraud,” said Long. “This has been a historical problem for this industry, but until this point, no cases have been tried successfully in North Carolina. The sentence of active time for Mr. Ross proves that not only are our investigators taking this seriously, but the courts are doling out appropriate punishment for anyone who commits fraud.”
The Department of Insurance employs 19 sworn law enforcement officers dedicated to investigating claims of insurance fraud. To report suspected fraud, contact the Department of Insurance Investigations Division at (919) 733-7434. Callers may remain anonymous. Information is also available at www.ncdoi.com.
Topics Fraud North Carolina
Was this article valuable?
Here are more articles you may enjoy.
Progressive Gains as Drivers Shop Around for Auto Insurance—Again 
North Carolina Adjuster and Son Charged With Embezzlement in Roof Jobs 
Vintage Ferrari Owners’ Favorite Mechanic Charged With Theft, Fraud 
Uncertainty Keeps Prices Up; No Prior-Year Loss Development: Travelers 
