“Operation Dirty Money,” an investigation conducted by the Florida Workers’ Compensation Fraud Task Force, has resulted in multiple arrests. Eight individuals have been charged 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.
The investigation 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 several Florida 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.
The fraud task force was jointly created by Florida’s Division of Insurance Fraud and the Broward County Sheriff’s office in August of 2011, and has to date netted more than $140 million in fraudulent transactions associated with 12 shell companies. “This kind of fraud is diverting nearly $1 billion from Florida’s economy annually and is putting honest small businesses and employees at risk,” Florida CFO Jeff Atwater said.
Anyone with information about these or any other incidents of suspected insurance fraud is asked to call 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.
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