President of Now-Defunct Company Sentenced for Stealing More Than $450,000 from State of NJ & Insurance Company
Trenton, NJ (WorkersCompensation.com) - Attorney General Jeffrey S. Chiesa announced that the president of a now-defunct Mercer County construction company was sentenced to eight years in state prison today for stealing a total of more than $450,000 by providing false and misleading information to its workers' compensation carrier and failing to file tax returns or underreporting wages for his business and himself to the New Jersey Department of Treasury.
Herlindo Garcia-Merlos, 49, whose last known address was in Trenton, was sentenced to eight years in state prison by Superior Court Judge Gerald Council in Mercer County. In addition, Garcia-Merlos was also ordered to pay $315,680 in restitution to New Jersey Manufacturers Insurance Group and $135,462 in restitution to the New Jersey Department of Treasury. On Nov. 28, Garcia-Merlos pleaded guilty to a criminal accusation charging him with two counts of second-degree theft by deception.
“The lengthy prison sentence imposed upon this defendant should act as a strong deterrent to anyone who fails to provide adequate and lawful workers' compensation insurance,” Attorney General Chiesa said. “Such frauds will not be tolerated and will be investigated and prosecuted to the fullest extent of the law.”
Garcia-Merlos was the president of the now-defunct Orients Construction Company, Inc. (Orients), located in Trenton. In March 2009, Garcia-Merlos ceased doing business as Orients and began doing business as Melrose Construction, Inc.
In pleading guilty, Garcia-Merlos admitted that, between February 2007 and April 2010, false and misleading information was provided to NJM Insurance Group. The investigation determined that the type of services rendered by Orients as well as the amount of payroll during the specified policy periods were not true. As a result of the fraud, Garcia-Merlos obtained reduced premiums that his company was not entitled to resulting in the premium difference of $315,680.
Acting Insurance Fraud Prosecutor Ronald Chillemi noted that Garcia-Merlos also pleaded guilty to stealing more than $135,462 by failing to file tax returns for his companies, Orients and Melrose Construction. The investigation determined that Garcia-Merlos failed to file tax returns for Orients and/or Melrose in 2006, 2007, 2008, 2009 and 2010. The investigation also determined that Garcia-Merlos underreported wages on his individual tax returns during the aforementioned years.
Deputy Attorney General Cheryl Maccaroni and Detective Natalie L. Brotherston coordinated the investigation. Acting Insurance Fraud Prosecutor Chillemi thanked Supervising Auditor Michael Mullane and Auditor William Makar of the New Jersey Division of Taxation, Office of Criminal Investigation for their assistance in the investigation. Acting Insurance Fraud Prosecutor Chillemi also thanked the following people from New Jersey Manufacturers Insurance Group: Assistant Vice President Loni Hand and Senior Investigator Kelly Larkin of the Special Investigations Unit, and Audit Operations Manager Joseph Dotro of the Premium Audit Department.