Construction Firm Owner Pleads Guilty To Worker's Compensation Fraud

LAKELAND, FL — A Lakeland man has pleaded guilty to conspiracy to commit wire fraud in connection with his failure to obtain workmen's compensation insurance coverage for employees of his construction company, according to the Department of Justice.

Ramon Paz, 52, faces a maximum penalty of 20 years in federal prison. A sentencing date has not yet been set.

According to the plea agreement, Paz owned and managed a construction company that he registered with the state of Florida in December 2016. The company supplied construction services and labor to work for construction site contractors.

To comply with Florida law, Paz’s company was required to secure and maintain adequate worker’s compensation insurance coverage. Providers of worker’s compensation insurance base the premiums they charge and the amount of coverage they provide on the number of employees a company has and the total annual payroll of those employees.

According to court documents, Paz’s company had agreements with contractors and subcontractors to use workers employed by Paz at construction sites and these workers were often undocumented aliens who were actually working for and under the daily supervision and direction of the contractors.

Paz or others would then regularly receive “payroll checks” from contractors that were cashed at various financial institutions to pay Paz’s “employees” and other related expenses.

The investigation shows that Paz falsely represented in insurance applications that his company had a limited payroll and a limited number of employees that worked on construction sites. Paz also sent fraudulent wire communications to numerous contractors reporting that his company’s employees had full worker’s compensation coverage.

In reality, said investigators, Paz’s company received and cashed more than $21 million in checks from various construction contractors for these “employees.” These payroll figures far exceeded the limited payroll figures that Paz reported to his worker’s compensation insurance company.

As a result, the employees of Paz’s company performed work on job sites without adequate insurance coverage, said investigators. In addition, the insurers lost premiums they would have charged had they been aware of the true number of workers their policies were being manipulated to cover.

As a result of these misrepresentations, Paz’s company also claimed no responsibility for ensuring that workers were legally authorized to work in the United States and that required state and federal payroll taxes were being paid for these workers. The contractors who actually paid these workers’ wages and used their services were, therefore, also able to avoid responsibility for those duties.

This case was investigated by Homeland Security Investigations and the state of Florida Department of Financial Services.