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THE BLUEPRINT:
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Defendant pleaded guilty to insurance fraud
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$3.5M in payroll underreported, leading to over $600K in unpaid premiums
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Scheme uncovered by NYSIF audits from 2019 to 2022
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Restitution and fines due by Dec. 2 or jail time may follow
A Rockville Centre business owner and his Queens-based construction company pleaded guilty Tuesday to insurance fraud in a workers’ compensation scheme that resulted in more than $600,000 in underpaid policy premiums, according to the Nassau County District Attorney’s Office.
Mahendranauth Khargie, and his company GC Stud pleaded guilty to third-degree insurance fraud. The company also pleaded guilty to effect of failure to secure compensation under the New York Workers’ Compensation Law, officials said.
“This calculated scheme of underreporting millions of dollars of payroll to defraud the state’s insurance system was a deliberate effort to gain an unfair advantage over businesses doing things the right way,” Nassau District Attorney Anne Donnelly said in a news release about the guilty plea.
“When employers cheat the system, they put workers at risk,” she said. “We will continue to work with our state partners in holding businesses owners accountable when they try to undermine the integrity of systems put in place to help employees.”
According to officials, annual audits by New York State Insurance Fund (NYSIF) investigators found the defendants allegedly underreported payroll between April 2019 and March 2022, resulting in premium fraud.
As an NYSIF Workers’ Compensation policyholder, Khargie and his company were required to submit annual financial records, including income and payroll, to renew coverage, the DA’s office said. However, records showed the defendants hid payments from three steel and iron fabrication companies in an undisclosed JPMorgan Chase account. In total, Khargie underreported over $3.5 million in payroll, leading to underpayment of workers’ compensation premiums, according to the DA’s office.
Khargie and GC Stud are scheduled to be sentenced on Dec. 2. The defendant is required to pay $625,000 in restitution to NYSIF before that date, according to the DA’s office. If Khargie fails to pay the full amount, he could face a prison sentence of two to six years. GC Stud faces $6,000 in fines, also due on Dec. 2.
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Adina Genn
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