In this Edition... To Catch a Thief

Unlike the glamorous depiction of thievery portrayed in Alfred Hitchcock’s film To Catch a Thief, the Labor Department strives to identify and hold accountable employees and employers alike attempting to save a penny here and there by cheating the system. This month’s edition shows some of the ways the department uncovers various types of fraud. You will discover some methods are less conventional than others.

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Stealing from Goodwill: Ex-VP Embezzles over $1 Million

Buckling Up Works

It was just like any other Wednesday morning in June 2010, when Director of the Division of Employment Security (DES), Gracia Backer, arrived at work.  Little did she know that this particular day would be anything but average. Things started heating up when Backer received information from a caller, who indicated she had been in contact with DES Benefit Representative, Kevin Adams.  Confusion and suspicion arose immediately considering there is no position in the DES titled, “Benefit Representative,” and more importantly, there was no DES staff member named Kevin Adams.

Kevin Adams was the pseudonym that former Goodwill Executive, Ronald Partee, was using while impersonating a member of the DES.  The DES’s recognition that someone was impersonating a staff member was only the tip of the iceberg for an investigation that uncovered how deep Partee’s scams actually went.  Over the course of three years, Partee embezzled more than $1 million from MERS/Goodwill by using fraudulent bills, invoices, and letters sent to Goodwill, with which he fooled members of the company’s accounts payable department into drafting checks.

While stealing from Goodwill, an establishment working to help those in need obtain work and provide affordable necessities, Partee led what the St. Louis Post-Dispatch deemed as a, “lavish lifestyle”.  According to the Post, he used the stolen money to purchase expensive vehicles, fund his traveling, and attend several sporting and concert events.

After realizing that someone was impersonating a DES employee, Backer contacted the Department Director, Larry Rebman. Director Rebman quickly notified the Department of Public Safety about the scam as well as released a video statement to warn the public. The matter then was assigned to the Missouri Highway Patrol, and in January 2011, Partee pled guilty to one count of felony embezzlement and another of money laundering. This year in May, Partee was sentenced to 70 months (nearly six years) in prison.

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Tic-Toc: Time Matters

Time is dear to most employees as they have other obligations outside of work. Time is also money in that employers expect employees to complete their tasks by the end of the work day.  In the event of a workplace injury, both party’s time is affected. And for the Division of Workers’ Compensation, the clock starts ticking to receive vital information about the incident.  

Workers’ compensation insurance is an important safety net for Missouri workers.  One key aspect is that most injuries sustained by workers on the job must be reported to the Division of Workers’ Compensation (DWC) within 30 days.  This is known as the first report of injury (FROI) and not ALL employers file on time.  More than 300 FROI’s are late every month. Unfortunately, some insurers or third party administrators try to cheat the system by not following the rules set by Missouri Worker’s Compensation laws.

The DWC started monitoring late reporting in August 2009, and found that of these third party administrators and insurers, 89 of them had submitted at least one FROI late that month.  Knowingly failing to report injuries within the required time is fraud, a criminal matter.  In order to reduce these numbers, the DWC mailed more than 70 letters to those filers that were consistently filing late to remind them of Missouri law and the outlined timeframes, as well as notifying them that their negligence was being monitored. 

More than 30 of the offending companies tried to improve their reporting status by contacting and sending supplemental information to the DWC and by December 2010, late report monthly filing percentages were down to 2.6 percent.  Additionally, the number of trading partners submitting one or more late reports was down more than 25 percent from the original August 2009 numbers.

Become more aware on the job and check out the DWC’s verification tool, “Are You Covered?” to see whether or not your employer provides workers’ compensation coverage. And if you are injured on the job, it never hurts, no pun intended, to give the agency a call to ensure your injury was reported.

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College Grads - Job Outlook

Are You Working off the Books?

OSHA Crane Law

Have you started working a new job recently? If so, chances are that you had to fill out some paperwork upon employment.  Did you read the fine print to see what you agreed to?  Even if you have been working at the same job for an extended period, have you ever taken a look at your paycheck to make sure the proper taxes are deducted? It may just be worth asking yourself these questions in order to ensure you are not a victim of 1099 fraud, or worker misclassification.  Take it upon yourself to protect the rights you are entitled to as an employee.

When an employee is classified as something other than an employee, such as an independent contractor, it is considered worker misclassification. As a result, the person is deprived of the employee rights and benefits to which they are entitled. 

Misclassification generally happens in one of two ways: 1) employees are not reported at all (working off the books or paid under the table in cash), or 2) employees are classified incorrectly as independent contractors. Both scenarios would deny benefits like unemployment and workers’ compensation to the employee. Employers that play this risky game have unfair tax advantages over other employers due to not paying taxes for the misclassified worker.

Even though most employers are compliant with the law, there are those that make bad calls due to poor guidance from their accountant or from other employers in the coffee shop when it comes to classifying employees in the “gray area”. However, the Department discovers hundreds of employers every year that intentionally misclassify workers or employers that misinterpret the state law. 

Something the department investigators are seeing more frequently is employers that have employees sign away their rights as workers on some kind of illegitimate contract. State law does not allow workers to sign away their rights and such a document would not hold up in court.

Misclassification of workers is illegal and punishable by law. Employers that knowingly misclassify their workers are subject to penalties in the amount of $50 to $1,000 per day per misclassified worker, and/or up to six months in jail per violation.

To find out more about worker misclassification visit our website…

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