Arrests in ‘Operation Dirty Money,’ Workers’ Comp Fraud Check Cashing Scheme

Tallahassee FL (WorkersCompensation.com) – Florida Chief Financial Officer Jeff Atwater and Broward Sheriff Al Lamberti today announced multiple arrests in “Operation Dirty Money,” an investigation conducted by the recently formed Workers' Compensation Fraud Task Force, which has to date netted more than $140 million in fraudulent transactions associated with 12 shell companies. The task force, created jointly by the Florida Department of Financial Services' Division of Insurance Fraud (DIF) and the Broward Sheriff's Office (BSO), charged eight individuals with workers' compensation fraud and money laundering for their involvement in a large-scale check cashing scheme to evade the cost of workers' compensation coverage.

“This kind of fraud is diverting nearly $1 billion from Florida's economy annually and is putting honest small businesses and employees at risk,” CFO Atwater said. “I am proud of the diligent efforts of my insurance fraud detectives, Sheriff Lamberti and his team here at the Broward Sheriff's Office, and the prosecutors who have come together to make this joint fraud task force a success.”

“Through collaborative efforts between BSO and our state law enforcement partners in the Workers' Compensation Fraud Task Force, we were able to shut down a prolific criminal enterprise,” Sheriff Lamberti said. “Now we will be able to use the illegal funds seized from the bad guys, through our Law Enforcement Trust Fund, and give it to the good guys.”

"I am grateful to all of the partnering agencies who have brought down a workers' compensation fraud ring. My Office of Statewide Prosecution will prosecute these individuals and ensure that justice is served," Attorney General Pam Bondi said. "I congratulate the Workers' Compensation Fraud Task Force for a job well done."

During the joint investigation it was revealed that Hugo Rodriguez, owner of the Oto Group, Inc., was the "ring leader” of seven individuals and the facilitator of 10 known shell companies that funneled in excess of $70 million in undeclared and undetected payroll through different money service businesses. By using shell companies, Rodriguez was able to run a large construction operation and avoid paying the cost of workers' compensation coverage, leaving employees at risk and scamming legitimate businesses.

K & N Food Corp., a licensed money service business in Palm Beach County owned by Nilbala and Kanti Patel, was the first one used by Rodriguez and his associates. The Patels are set to enter into plea agreements with Attorney General Pam Bondi's Office of Statewide Prosecution, and have agreed to the immediate forfeiture of over $490,000 in illicit proceeds seized during the search of their business in September of 2011.

Arrests of these individuals were made in multiple counties including Broward, Miami-Dade, Palm Beach and Polk. Attorney General Bondi's Office of Statewide Prosecution and Miami-Dade State Attorney Katherine Fernandez-Rundle will prosecute the arrested individuals.

CFO Atwater convened a work group in August 2011 to review the practices of certain bad actors in the check cashing services industry who were aiding in complex workers' compensation premium fraud schemes such as this one. The work group released its report in November, recommending reforms to combat this scheme to the Legislature. Championed by Sen. Thrasher and Rep. Davis during the 2012 Legislative Session, reforms equipped regulators and law enforcement officials with critical tools, including the ability to make unannounced examinations and outlawing the possession of thumbprint stamps or other items used to forge payment authorization. New provisions are helping detect workers' compensation insurance fraud more quickly, protecting the honest players in the marketplace while ensuring those responsible for diverting more than a billion dollars from Florida's economy are caught and held accountable.

The Workers' Compensation Fraud Task Force was jointly created by CFO Atwater's Division of Insurance Fraud and Sheriff Lamberti's office in August of 2011. Through joint efforts, the task force has been able to successfully shut down 12 shell companies and identify $140 million in fraudulent transactions associated with these companies.

Anyone with information about these or any other incidents of suspected insurance fraud is asked to call 1-800-378-0445. Citizens who provide tips can remain anonymous. The Department of Financial Services to date has awarded almost $275,000 to more than 40 citizens as part of its Anti-Fraud Reward Program. The program rewards individuals up to $25,000 for information that directly leads to an arrest and conviction in an insurance fraud scheme.

Chief Financial Officer Jeff Atwater, a statewide elected official, oversees the Department of Financial Services. CFO Atwater's priorities include fighting financial fraud, abuse and waste in government, reducing government spending and regulatory burdens that chase away businesses, and providing transparency and accountability in spending.

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