The manager of an off-the-books construction-worker payroll operation in Naples, Florida, pleaded guilty last week to a scheme that prosecutors said defrauded the U.S. government of $4 million and swindled insurers out of workers’ compensation premiums.
Alexis Garcia, manager of Tape Drywall Services Inc., and Carlos Alberto Hernandez were indicted in August. Garcia, also known as “Pedro,” pleaded guilty Aug. 18 to one count of tax fraud by failing to withhold taxes on workers. The indictment and the U.S. Department of Justice said he also defrauded workers’ comp insurers by underreporting payroll, from 2017 through 2019.
Contractors would write checks to Tape Drywall for workers that Garcia supplied for construction projects. Garcia and Hernandez would then cash the checks, retain a fee, and pay the workers in cash, avoiding tax withholding and insurance for many of them. Altogether, the operation cashed more than 3,600 checks totaling more than $28 million, prosecutors said.
Garcia’s sentencing date has not been set. He faces as much as five years in prison and some level of restitution. Garcia’s alleged co-conspirator, Hernandez, died in May and charges against him were dismissed, federal court records show.
The insurance companies defrauded in the scheme were not named in the indictment.
Regulators have tentatively approved another new property insurer for the Florida market – Vision Insurance Exchange – led by former Florida Peninsula Insurance CEO Roger Desjadon.
The Florida Office of Insurance Regulation posted a consent order Aug. 7, noting that the Cape Coral-based Vision would be granted a certificate of authority if it provides documentation within 60 days, including a reinsurance agreement, a managing general agency agreement, proof of adequate funds held by a bank, and other information.
Desjadon declined comment but told Insurance Journal that he will be able to provide more information about the company’s finances and plans later this fall.
If a license is granted, Vision would be at least the 14th property-casualty firm to set up shop in Florida since state lawmakers approved landmark changes that have reduced what many in the industry had called excessive and frivolous claims litigation.