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Uncovering a $32 million employer fraud scheme

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All in a day’s work for ISI Investigator Marcella Graham

Checking medical reports and depositions. Reviewing surveillance footage. Working with adjusters, underwriters and law enforcement. It’s all in a day’s work for Marcella Graham, senior investigator at ISI.

In case you’re not familiar with ISI – Investigation Solutions, Inc. – they’re ACM’s investigation arm, and also provide nationwide field investigation, surveillance and SIU services to the insurance, legal and self-insured communities.

While ISI investigates all types of insurance fraud, from auto claims to medical provider and work comp fraud, Marcella concentrates on the latter: workers’ compensation fraud.

Her latest case made headlines recently when she aided the California Department of Insurance in a $32 million workers’ compensation fraud case that resulted in an arrest earlier this month.

DOI detectives arrested Gina Marie Gregori of Lafayette, CA on charges of underreporting payroll and defrauding ISI’s client, a worker’s compensation carrier as well as other carriers, of $32 million. Charged with 19 felony counts, Gregori is being held on $5.2 million bail at the San Francisco County Jail. Owner of three companies (GMG Janitorial, GMG Billing Services Plus and Apex Janitorial Solutions), Gregori allegedly underreported payroll and falsified documents to their workers’ compensation carrier.

The carrier requested ISI’s help when they were alerted by the DOI of suspicions of fraud on the part of one of their clients, Billing Services Plus, Inc. Marcella ran a series of background checks into the three companies and their owners, providing proof to the DOI that the three companies actually are the same company.

Knowing the company had an upcoming audit, she also alerted the auditor of the potential fraud. While the company provided records showing they had only 10 full-time employees, 10 part-time employees and a payroll of $259,000, in actuality the employee count was more than 200 with a possible $600 million in payroll; the exact dollar amount is still under investigation.

Criminal charges were filed shortly after ISI handed information to DOI. The active criminal case is currently being prosecuted by the San Francisco County District Attorney's Office.

“Most of my employer fraud cases involve underreported payroll, paying cash under the table or misclassifying employees, all in an effort to keep work comp premiums low,” Marcella explained.

She’s currently working on a $2 million case of employer fraud that she hopes will result in indictments by the end of 2017. An anonymous tip on the employer opened the case and allowed Marcella and the auditor to gather evidence to prove the case.

“Some 70 – 80 percent of my work is done online, doing background checks, reviewing surveillance videos, poring over medical reports, underwriting files, etc.,” she said.

Marcella also prepares questions for upcoming depositions, to ensure all the right questions are asked in a way to get to the answers needed and determine if there’s actually a viable criminal case. Once the suspicion is viable, Marcella talks with the DA office to discuss moving forward with the case.

“Then we turn it over to them, providing our statement and documentation, and outline the restitution that’s owed. They’ll file charges, make arrests, and move forward in the case.”

Getting her feet wet in the criminal world

Marcella began her career in 2002 in workers’ compensation as a file clerk. She advanced to the role of a work comp adjuster while simultaneously earning her criminal justice degree. She’s been an ISI investigator since 2011 and a senior investigator since 2014.

“The latest case I saw to the end was also an employer fraud case,” she said. “The employer had two companies and had a work comp policy for 35 employees. One company alone had over 200 employees. They were funneling all their claims from that company through the other one. When the case was closed, restitution was ordered to the tune of $200,000 to cover all the carrier’s costs.

“Although employer fraud can be difficult to prove, most of these crooked employers leave a trail in one way, shape or form,” Marcella explained.

Topics: Company Growth