Miami, FL – Florida Chief Financial Officer Jimmy Patronis recently announced the arrest of Hector Gutierrez-Morales, owner of HG & AKE Construction Corporation, for Workers’ Compensation Premium Fraud, Application Fraud, and Organized Scheme to Defraud for allegedly concealing company payroll amounts to avoid higher premiums for required workers’ compensation insurance coverage.
CFO Jimmy Patronis said, “When bad actors scheme to avoid required workers’ compensation coverage, they put their employees and customers in danger. Fraud like this also drives-up insurance rates for honest contractors in our state that choose to play by the rules. Thank you to my insurance fraud detectives for their hard work on this case and ensuring contractors in Florida are protecting themselves, their employees, and all Floridians.”
An investigation by the Department of Financial Services, Division of Investigative & Forensic Services (DIFS), Bureau of Workers’ Compensation Fraud, revealed that the owner of HG & AKE Construction Corporation, Hector Gutierrez-Morales, allegedly concealed payroll to avoid paying higher workers’ compensation premiums. In 2018, Gutierrez-Morales applied for workers’ compensation coverage with Traveler Property Casualty of America with an estimated annual payment of approximately $161,000. Based on the provided information, a traditional policy was issued with an estimated annual premium of approximately $28,000. Gutierrez-Morales proceeded to renew the coverage for two additional years with increases in estimated annual payroll. The investigation revealed that Gutierrez-Morales, on behalf of HG & AKE Construction Corporation, failed to notify his insurance company of significant annual payroll changes. Detectives were able to determine that during these policy periods, Gutierrez-Morales collected more than $8.8 million over three years for labor costs paid from contractors to his company. According to the insurance company, had the additional payroll been reported, HG & AKE Construction Corporation would have been assessed an additional $796,762 in worker’s compensation insurance premium charges.
Gutierrez-Morales was arrested and booked into the Miami-Dade County Jail on July 20th where he was charged with Workers’ Compensation Premium Fraud, Application Fraud, and Organized Scheme to Defraud. If convicted on all charges, he faces up to 180 years in prison.
Source: FL DFS