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Check Cashing Payroll Fraud Scheme Thwarted in Florida

Florida legislators have made a bold move in the battle against payroll fraud with the passing of Florida House Bill 217 titled “Money Services Businesses”.  Aimed directly at the bandits who run check cashing stores to enable dishonest contractors to avoid paying workers’ compensation and payroll taxes, the bill is now on its way to Governor Rick Scott for his signature into law.  The details of the bill were explained in a press release from the Florida Office of Financial Regulation (OFR).

“The new legislation will require check cashers to log any checks cashed in excess of $1,000.  In addition to the check amount, each business will be required to submit traceable information such as payor, payee, fee charged, type of identification presented and payee’s workers’ compensation insurance policy number, if the check was made out to a business.  The bill also provides that multiple checks accepted from any one person in one day, which total $1,000 or more, must be aggregated and reported in the database.”

Readers of Construction Citizen have already been informed about how these check cashing store / workers’ comp fraud schemes work, but here it is again.  A dishonest contractor will submit a bid for a job using a company name which lists only a few employees – just enough to obtain a small workers’ compensation policy.  The contractor will then take checks paid to that company by the general contractor to a check cashing store to cash them so that most of the workers can be paid in cash.  The store owner is often part of the scam, turning a blind eye on the regular cashing of large company checks.  The contractor does not list as employees the majority of the workforce and does not pay workers’ compensation on their behalf.

After July 1, 2013, when the law will go into effect if signed, the new database will become a powerful tool in identifying those who attempt to break the law through this type of check cashing scheme.

This is coming not a moment too soon, as just last month the office of Florida’s Chief Financial Officer Jeff Atwater announced another big arrest resulting from “Operation Dirty Money” conducted by Florida’s Workers’ Compensation Fraud Task Force.  John Diaz and Mercedes Avila-Diaz have each been charged with workers’ compensation fraud for a total of $35 million in fraudulent transactions at Diaz’s licensed check cashing store and at their company which was advertised as a tax preparation company for over 10 years.  According to the press release:

“Diaz and Avila-Diaz collectively face up to 95 years in prison if convicted on all counts. The Miami-Dade County State Attorney’s office will be prosecuting this case.

“The Workers’ Compensation Fraud Task Force includes CFO Atwater’s Division of Insurance Fraud, the Broward Sheriff’s Office and the Palm Beach County Sheriff’s Office. Through joint efforts, the task force has been able to successfully shut down more than 30 shell companies and identify $335 million in fraudulent transactions associated with these companies.”

If successful, the check cashing database may be duplicated in other states.


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