Northwood, OH – The owners of Triple Star Roofing (Wood County) were found guilty of fraud July 15 for failing to report payroll to the Ohio Bureau of Workers’ Compensation (BWC) in an attempt to avoid paying workers’ comp insurance premiums. Frederick Diebert and Michelle Scaggs face possible prison terms of one to five years and fines of up to $10,000 when they are sentenced Sept. 13.
“For years, Mr. Diebert and Ms. Scaggs claimed their company only used subcontractors and reported they had no payroll, but that simply wasn’t the case,” said BWC Administrator/CEO Steve Buehrer. “Schemes like this to avoid paying premium undermine the purpose of workers’ comp insurance – to protect workers who are injured on the job – and will result in unwanted attention from our investigators.”
The BWC’s Special Investigations Employer Fraud Team (EFT) received an anonymous tip that Triple Star Roofing was operating with employees, but reporting to BWC the business had no employees or payroll. Triple Star Roofing workers were interviewed, and said they felt they were employees even though Triple Star classified them as subcontractors and issued them 1099 tax forms. Bank records were analyzed, and the EFT found that checks were issued to the same individuals on a weekly basis with many of them indicating “payroll” in the memo section. In addition, the BWC received and allowed two claims filed by injured workers of the company; those claims were not appealed by Diebert or Scaggs.
Although Scaggs refused to cooperate with an audit for more than two and a half years, BWC did eventually conduct an audit that showed Triple Star Roofing failed to report payroll to the BWC from 2004 to 2008. This resulted in under-reported premiums of $283,592 for that time period while the business continued to operate
The EFT referred the case to the Wood County prosecutor. Diebert and Scaggs were indicted on third-degree felony charges of workers’ compensation fraud. A jury found both Diebert and Scaggs guilty of the charges on July 15. Sentencing is scheduled for Sept. 13.
Additional charges are pending for the 2009 to 2012 time periods.
Source: Ohio BWC SID