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FOR IMMEDIATE RELEASE |
CONTACT: Erin Duggan |
DISTRICT ATTORNEY VANCE ANNOUNCES INSURANCE FRAUD INDICTMENT
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Manhattan District Attorney Cyrus R. Vance, Jr. today announced the indictment of the operator of a Manhattan-based temporary staffing company for fraud in connection with his securing workers’ compensation insurance, which resulted in his underpayment of $25 million in premiums.[1] “Fraud like this drives up premiums for honest New Yorkers, and hurts both taxpayers and our workforce,” said District Attorney Vance. “Workers’ compensation premium fraud is a $5 billion a year problem in the United States. Our efforts working with the New York State Insurance Fund have recovered much-needed money for the state, and today's case is the largest premium fraud case our Office has seen to date. We will continue this valuable partnership to investigate and prosecute those who scam the system.” ERIC GOLDSTEIN has been charged in a five-count indictment with insurance fraud, forgery, offering a false instrument for filing, and fraudulent practices under the state’s workers’ compensation law. The charges stem from the defendant’s ownership of 50 temporary placement agencies under the umbrella of his company, GT Systems. According to documents filed in court, from 1997 to 2000, GOLDSTEIN’S companies maintained workers’ compensation insurance through the NYSIF. Every New York employer of more than one employee is required to hold workers’ compensation insurance; payroll and occupation are two key components in calculating the premiums for workers’ compensation insurance. Low risk jobs, such as clerical workers, have lower rates than high risk jobs, such as security guards. In 2000, NYSIF cancelled GOLDSTEIN’s policy under the GT Systems name because of non-payment of premiums. According to NYSIF rules, the defendant or any company owned by him was barred from getting a new policy with NYSIF as long as the balance remained unpaid. GOLDSTEIN obtained private insurance for GT Systems from 2000 to 2003. From 2003-2007, according to court documents, seven companies owned by GOLDSTEIN applied for and were granted worker’s compensation policies from NYSIF. GOLDSTEIN was able to do this by having his employees fill out the applications in their names and falsely deny any connection to GOLDSTEIN and GT Systems. In order to conceal this scheme, GOLDSTEIN refused to allow audits of the companies’ payroll by NYSIF. As a result of the audit refusals, NYSIF simply raised the premium rates on the policies in effect. In order to avoid paying the higher rates, GOLDSTEIN stopped making payments and then opened a new company so that a new policy could be obtained and the fraudulent scheme could continue. GOLDSTEIN is also charged with misrepresenting the amount of payroll for each of the companies and the type of work done by the companies. By making sure most of his workforce was incorrectly classified as clerical, defendant’s companies were able to get insurance at a lower rate. In addition, GOLDSTEIN’S companies drastically underreported payroll to avoid paying higher premiums and he directed his employees to create fake insurance certificates. The certificates fraudulently represented coverage that the companies did not have. “I want to thank Manhattan District Attorney Cyrus R. Vance, Jr. and his office for their persistence in pursuing this case,” said NYSIF Chief Deputy Executive Director Francine James. “This indictment is the result of a lengthy investigation by the DA’s Office and NYSIF’s Division of Confidential Investigations to unravel the dealings of a large company charged with fraudulent practices over several years. The case includes dozens of temporary employment agencies in a multi-million dollar scam involving unpaid premium, which NYSIF intends to recover for the State of New York. No one should forget that workers’ compensation fraud is a felony which saps our economy of billions of dollars annually, leading to higher prices, lower wages, and less money for hiring, training, investment and expansion. In the case of premium fraud, it also leads to abuses of unprotected workers for whom employers have no coverage. NYSIF is the largest workers’ compensation insurance company in New York. With the help of law enforcement authorities, NYSIF is committed to fighting workers’ compensation fraud because it is our job to protect legitimate businesses and working men and women while controlling costs passed on to the public.” The investigation was conducted jointly by the Manhattan District Attorney’s Office and the New York State Insurance Fund, Division of Confidential Investigations. The indictment announced today is the result of ongoing investigations by the District Attorney’s Office into fraud involving the underpayment of premiums to the NYSIF. District Attorney Vance thanked Assistant District Attorneys Beth Fisch Cohen and Jean Marie Donohue of the Labor Racketeering Unit-Construction Industry Strike Force, who are handling the prosecution under the supervision of Assistant District Attorney Michael Scotto, Chief of the Labor Racketeering Unit-Construction Industry Strike Force. District Attorney Vance also thanked Supervising Financial Investigators Sanchita Aggarwal and William Tamparo, and paralegal Michelle Moy of LRU-CISF. District Attorney Vance also thanked the District Attorney’s Office Squad, specifically Captain Ronald Haas, Lieutenant Patrick Johnston, Sergeant Anthony Gonzales, and Detective Patricia O'Connor, for assisting in the investigation. District Attorney Vance also thanked Senior Computer Forensic Analyst Selena Ley, and Computer Forensic Analysts John Forames and Alexander Allphin, under the supervision of Steven Moran, Director, High Technology Analysis Unit. District Attorney Vance also thanked the New York State Insurance Fund for their assistance in the investigation, including Chief Deputy Executive Director Francine James, NYSIF; Director Laurence LaPointe, Division of Confidential Investigations; Supervising Investigator Benedict Emengo; Senior Investigator Curtis Brantley II; Associate Premium Auditor Idowu Agbaje; Senior Auditor Jean Martial; Senior Auditor Stuart Kalaminsky; and Senior Auditor Denham Spence.
ERIC GOLDSTEIN, 10/16/1948 Charges:
A class B felony is punishable by up to 25 years in prison, a class C felony is punishable by up to 5 to 15 years in prison, and a class E felony is punishable by up to 1 1/3 to 4 years in prison. [1] The charges contained in the indictments are merely allegations, and the defendants are presumed innocent unless and until proven guilty.
Additional news available at: www.manhattanda.org New York County District Attorney | duggane@dany.nyc.gov | 212-335-9400 |
