Okeechobee, Fla. Contractor Arrested on Workers’ Comp Fraud Charges

Okeechobee building contractor Merle Dee Johnson has been bonded out of the Okeechobee County Jail after being arrested by Florida investigators on charges of allegedly committing workers’ compensation fraud and grand theft. Johnston’s bond had been set at $30,000.

Johnston was arrested after he allegedly used loan money for personal use instead of completing construction on an Okeechobee couple’s home. The complaint against Johnston also claims the general contractor failed to carry proper workers’ compensation coverage.

According to Florida CFO Tom Gallagher, Johnston initially was paid $60,000 from a construction loan the couple took. The money was to begin work on their new home in Okeechobee County.

A Department of Financial Services release alleges Johnston reportedly used $23,000 for his personal use.

“This couple was left in a financial lurch and workers were put at risk of being injured without having workers’ compensation to protect them,” Gallagher said. “We will continue to aggressively pursue anyone who disregards the law and the safety and welfare of others.”

In six months after Johnston had allegedly been paid to start the project, detectives said only the foundation, blocks and trusses were installed. The detectives said Johnston never returned to complete the work and the structure has since collapsed.

Detectives working the case also learned that Johnston had not paid several outstanding bills. It was also determined that he had underreported his income and ultimately was working without proper workers’ compensation coverage, states the release.

Johnston allegedly billed the couple for approximately $19,000 in labor and supervision cost, while reporting only $2,300 worth of labor costs. Fraud detectives learned that Johnston reported only $2,300 in payroll for the entire year, although he was working other jobs.