Manhattan Labor Broker Indicted for Workers Comp Fraud

Four construction workers from a labor broker work on a high rise

On Sept. 5, 2019, Manhattan District Attorney Cyrus R. Vance announced the indictment of an unlicensed labor broker, Alvador Almonte Jr., and his insurance broker for conspiring to avoid nearly $1 million in worker’s compensation insurance premiums. Almonte and his broker, Steven Asvazadourian, were charged in a seven-count indictment that included Insurance Fraud in the First Degree, Scheme to Defraud in the First Degree, Fraudulent Practices in Violation of Workers Compensation Law and more. Prosecutors claim the two lied to insurers about the size of Almonte’s company and the nature of the work being performed by employees, leaving more than 100 construction workers underinsured. 

According to court documents, Almonte runs a multi-million dollar construction labor supply business in the New York metropolitan area. His companies include Power Services Solutions, LLC, Power Services of New York, Inc., South Side Services, Inc., and North Star Strategy, Inc. All provide laborers to companies involved in high-rise construction. Because of the degree of risk involved, the cost of workers’ compensation insurance for this class of workers is typically quite high. 

To lower Almonet’s worker’s comp costs, he and Asvazadourian devised a complex scheme. First, they under-reported the size of Almonte’s workforce and misclassified high-rise construction workers as cleaners and interior carpenters. Then, after they had secured coverage, they falsified insurance certificates to “prove” to their clients that the laborers were adequately insured. 

Additionally, when at least 12 of Almonte’s employees sustained work-related injuries and filed worker’s compensation claims, he refused to appear for hearings, claiming he was not their employer. 

One of the injured employees suffered disabling injuries when he fell 10 feet at a construction site and landed on an exposed piece of rebar. That person’s medical care was delayed for months, and he waited nearly a year to receive disability payments because the WCB could not establish the identity of his employer and insurer. Another employee who suffered a head injury after being struck by a piece of wood waited 14 months.

The Shady Side of Construction

Labor brokers have earned a shoddy reputation in much of the construction industry. Although the reputable ones provide a valuable service, many operate on the fringes, failing to pay their workers minimum wage or provide health insurance or worker’s comp. Many misclassify their employees as independent contractors to avoid complying with state labor laws. In the worst cases, employees are forced to work or live in unsafe conditions and are threatened with violence or deportation if they complain. 

Such was the case in California, where construction contractor Job Torres Hernandez was recently sentenced to eight years and seven months in prison for harboring undocumented workers and treating them as virtual slaves. Hernandez housed the workers in a warehouse in the San Francisco Bay area under deplorable conditions and threatened them with deportation, physical violence or retaliation against their families if they went to the authorities. According to the criminal charges, Hernandez had been managing a pipeline that lured undocumented Mexican immigrants to the United States with the promise of well-paying jobs since 2015. 

In addition to serving prison time, Hernandez will pay nearly $920,000 in unpaid wages as restitution for his crimes.  

The Importance of Due Diligence

Fortunately, unscrupulous labor brokers like Almonte and Hernandez represent a small part of the construction labor industry. What’s more, contractors can avoid being duped by doing a little bit of due diligence. According to Phillip Russell, an attorney with Ogletree, Deakins, Nash, Smoak & Stewart in Tampa, Florida, who spoke with Construction Dive, a little detective work can go a long way. He recommends that companies that use a labor broker ask, at a minimum, where the broker gets his workers and insist on seeing their worker’s compensation insurance policy’s declarations page. That document will show the company’s estimated annual payroll, the number of employees covered and the type of work they do. If this doesn’t match what the broker promises, then something is surely amiss.

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