Fraud News: Father and Son Building Scam, $1M Workers’ Comp Payroll Scheme

February 16, 2018

Iowa Father and Son Sentenced in Insurance Fraud Case

Two Iowa men were sentenced to two years of supervised probation after pleading guilty in Delaware County District Court recently to the charge of Fraudulent Practices in the Third Degree, an Aggravated Misdemeanor.

Hartman, Tobin
Hartman, Richard Herbert. Booking photos courtesy of the Delaware County Sheriff’s Office

Richard H. Hartman and his son, Tobin L. Hartman, were originally charged in connection with an insurance fraud investigation conducted by the Iowa Insurance Division’s Fraud Bureau and the Delaware County Attorney’s Office.

The investigation found that Richard Hartman filed a fraudulent insurance claim with Grinnell Mutual Reinsurance Company seeking insurance proceeds to cover damages he falsely reported to have been caused when he struck his son Tobin’s cattle barn with a skid loader, causing the building to collapse. His son provided false statements to the insurance company supporting his father’s version of the events.

The estimated cost to replace the damaged building exceeded $240,000.00 which the Hartman’s were ultimately unsuccessful in obtaining.

(Source: Iowa Insurance Division)

Miami Roofing Company Owners Arrested in $1 Million Workers’ Comp Scam

Jose Esmelin Martinez and Uzziel Isaias Jaramillo, owners of Esmelin Corporation aka as Esmelin Roofing Contractor (ERC), were recently arrested, according to an announcement by Chief Financial Officer Jimmy Patronis.

Martinez and Jaramillo allegedly concealed nearly $1.2 million in payroll on their workers’ compensation policy renewal application in an alleged attempt to illegally lower their premium costs.

“Florida will not be the state where criminals come to defraud the workers’ compensation system for a cheaper, inadequate workers’ compensation insurance policy,” said CFO Jimmy Patronis. “Employees could be put in harm’s way, forced to pay out of pocket for medical costs and law-abiding companies can’t compete with a fraudulently profiting company in their market. I refuse to let these criminals skew the free market system and maximize their revenues at the expense of their employee’s safety.”

Investigators with CFO Patronis’ Division of Investigative & Forensic Services discovered Martinez and Jaramillo reported an annual payroll estimate of $60,000 on their application for workers’ compensation coverage. Based on their estimated payroll, their premium was determined to be $14,051.

Investigators identified $288,263 in cashed payroll checks during ERC’s policy period at multiple money services businesses located within the South Florida area. After further investigation, ERC was found to have received at least $1,248,416 for their labor costs — exceeding the estimated annual payroll that was previously given to their insurance provider when applying for workers’ compensation coverage.

Had the actual amount of payroll been reported to their workers’ comp provider, the resulting premium rate would have been set at $278,209, a difference of $264,158.

Martinez was arrested January 18, 2018 and Jaramillo was arrested January 25, 2018. Both men were transported to Dade County Jail without incident. Both Martinez and Jaramillo have been charged with workers’ compensation fraud, grand theft and organized scheme to defraud.

This case will be prosecuted by the Office of State Attorney Katherine Fernandez Rundle of the 11th Judicial Circuit State Attorney’s Office. If convicted, Martinez and Jaramillo could face up to 60 years in prison.

(Source: Florida Chief Financial Officer)