Colorado Woman Sentenced for Work Comp Fraud

October 24, 2013

A Colorado woman who operated a tax and insurance business received an 18-month deferred sentence and was fined $3,000 for helping a client avoid paying worker’s compensation premiums on a construction project in Montana, the state Department of Justice said.

Sandra Armstrong, 50, of Thornton, Colo., entered an Alford plea last week to felony accountability to employer misconduct. Under the plea, Armstrong acknowledges prosecutors had enough evidence to gain a conviction.

Prosecutors say Armstrong helped Mexican contractor Efrain Cruz avoid paying some worker’s compensation premiums. Prosecutors say Cruz forced a Mexican citizen who was living and working illegally in the United States to declare he was an independent contractor, who could then waive worker’s compensation coverage. Armstrong helped the worker complete his paperwork to obtain an independent contractor exemption, court records said.

Cruz did have coverage on some of his employees, the Justice Department said.

The crime was discovered when the employee fell from a second-story truss and suffered a serious head injury while building a house in Big Sky in June 2008. Armstrong and her company, All Rates Insurance & Taxes in Westminster, Colo., then submitted a claim indicating the injured man was an employee of Cruz’s and entitled to worker’s compensation benefits for medical treatment and lost wages, officials said. The claim was paid.

Cruz has since returned to Mexico.

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