Worcester, MA – Attorney General Maura Healey recently announced that two Milford business owners have been indicted in connection with failing to accurately report their total payroll and workforce to avoid paying hundreds of thousands of dollars in insurance premiums.
“Premium avoidance and insurance fraud leaves lawful employers at a disadvantage and undermines the insurance system,” AG Healey said. “Insurance fraud has the potential to negatively affect everyone by raising rates and damaging the integrity of the system.”
“Workers Compensation insurance fraud places a financial drain on the system, and particularly onto honest policyholders who play by the rules,” said Daniel Johnston, Executive Director of the Insurance Fraud Bureau. “The Insurance Fraud Bureau will continue to work with AG Healey’s office, and investigate all schemes of this type that defraud the system and circumvent the rules.”
Segundo Nicolas Muyubisnay Cungachi (Cungachi), 31, of Milford was charged with Workers’ Compensation Fraud (5 counts) and Larceny Over $250 (2 counts). Maria Alegria Morocho Munoz (Morocho), 29, also of Milford was charged with Workers’ Compensation Fraud (2 counts) and Larceny Over $250 (2 counts).
According to authorities, Cungachi and Morocho formed three Milford area roofing companies between 2008 and 2014: Byron Construction in 2008, Nationwide Construction Corporation in 2010, and First Nationwide Construction Corporation in 2012. Each company was allegedly insured for workers’ compensation and were each assigned premiums based on their reporting.
The Workers’ Compensation Ratings and Inspection Bureau (WCRIB) establishes different categories of policy cost depending on the risk of injury associated with different types of jobs and applies the payroll and size of workforce to premium rates.
Authorities allege that based on their reporting, Cungachi and Morocho were granted lower premium rates on their company policies. As a result of this alleged scheme, Cungachi and Morocho put the insurance companies unknowingly at risk to cover any undisclosed employees for injuries that occurred or may have occurred during the policy periods and avoided paying more than $615,000 in insurance premiums.
The Insurance Fraud Bureau of Massachusetts (IFB) referred these cases to the Attorney General’s Office after an investigation into reports that the companies were committing insurance fraud.
A Worcester County Grand Jury returned indictments against Cungachi and Morocho on Thursday. The defendants will be arraigned in Worcester Superior Court at a later date.
AG Healey’s Insurance and Unemployment Fraud Division works to protect consumers and the integrity of the insurance system by investigating and prosecuting those who commit fraud against all types of insurers, including the Commonwealth’s unemployment insurance and workers’ compensation systems.
Assistant Attorney General Geoffrey Wood of AG Healey’s Insurance and Unemployment Fraud Division is prosecuting these cases with the assistance of investigator Phil Mantyla of the Attorney General’s Office and the Insurance Fraud Bureau.
Source: MA AG’s Office