NYSIF Helps Feds In Premium Fraud/Tax Fraud Prosecution

New York, NY (CompNewsNetwork) - New York State Insurance Fund Executive Director James J. Wrynn expressed his gratitude to federal law enforcement authorities in cracking a workers' compensation premium fraud case that landed a Queens businessman in prison for more than three years and won a judgment of restitution of more than $1 million for NYSIF.

Executive Director Wrynn also congratulated NYSIF's Division of Confidential Investigations (DCI) for its work in the case announced last week by United States Attorney for the Northern District of New York Andrew Baxter.

NYSIF investigators from New York City and Syracuse DCI units worked in cooperation with federal authorities leading to the arrest of Chong Mun Chae, 71, of Sunnyside, Queens, NY, who pleaded guilty to mail and tax fraud, and was sentenced to 46 months in prison by U.S. Senior District Judge Thomas J. McAvoy, followed by two years of supervised release.

“I want to express my appreciation for the arrest, conviction and sentencing in this case, and specifically for the efforts of U.S. Attorney Baxter,” Mr. Wrynn said. “NYSIF anti-fraud investigators worked diligently on issues involving premium fraud against NYSIF and, in cooperation with federal investigators, helped the build the case that brought this individual down.”

As part of the plea, Mr. Chae was ordered to pay NYSIF restitution of $1,067,265 for defrauding the Fund on workers' compensation premium.

As part of his scheme, Chae owned and operated several companies including Charlie Brown Services, Inc., Top Ace Services, K-One Service, Inc., and other names that he periodically altered.

Chae provided numerous laborers to various companies for asbestos removal work. However, when he applied for workers' compensation policies, he falsely claimed that he had only a single employee who worked as a receptionist or, depending on the policy, some other unrelated, non-hazardous job. By concealing the true number of employees and the hazardous nature of their work, Chae paid significantly lower premium rates for workers' compensation insurance.

Chae allegedly also failed to report substantial income from his businesses and was ordered to pay all taxes owed to the United States in an amount to be determined by the Internal Revenue Service.

A citizen of South Korea who has been in the United States illegally for decades, Chae will be deported after he finishes his federal prison term and, if he returns to the United States, he will be returned to federal prison to serve additional jail time.

This case was investigated by Special Agents of the United States Environmental Protection Agency and the Internal Revenue Service together with investigators from NYSIF. The case was prosecuted by Assistant United States Attorney Craig A. Benedict.

NYSIF is a competitive insurance carrier that sells workers' compensation and disability benefits insurance to any employer doing business in New York State. Approximately 185,000 employers hold NYSIF workers' compensation insurance policies, approximately 37 percent of the market.

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