Elvis Parra, owner of E&K Trucking, Inc. in Newark, was indicted Friday on second-degree charges of theft by deception and misconduct by a corporate official, third-degree insurance fraud, and fourth-degree workers compensation fraud in connection with the alleged scheme that cheated Liberty Mutual Insurance Company (“Liberty Mutual”) out of premiums.
“Employers who underreport their payrolls to avoid paying full price for workers compensation coverage aren’t merely cutting corners, they are committing serious crimes,” said Attorney General Porrino. “By providing false information, this defendant allegedly stole hundreds of thousands of dollars from an insurance company and will now face jail time if convicted.”
“Premium fraud doesn’t just hurt insurance companies,” said Acting Insurance Fraud Prosecutor Christopher Iu. “Honest employers are forced to pay more for coverage as insurer costs trickle down. Honest employers may also find themselves unable to compete with lower prices being offered by companies who use fraud to cut their business costs.”
According to the indictment, Parra provided false and misleading statements to obtain lower premiums on the workers compensation insurance he is legally obligated to provide employees. Para applied for coverage in 2012 to the Jersey Compensation Rating & Inspection Bureau (“NJ CRIB’), the state agency that sets the rates for workers compensation insurance in the involuntary market and designates the insurance company that will provide coverage to an applicant. In filling out the application, Parra falsely represented that his trucking company employed only three drivers who were paid a total of $75,000 annually, when in reality he paid more than $2.9 million in annual wages to an additional 81 owner/operator drivers, according to prosecutors. Parra also falsely responded ‘no’ to a question that asked if his company used owner/operator drivers, a term that refers to truck drivers who own their own tractors, according to the indictment.
A subsequent audit determined that Parra should have paid an additional $304,735 in premiums for Liberty Mutual’s initial policy, and $84,166 in additional premiums for the renewal policy Liberty Mutual was required to issue E&K Trucking as a result of NJ CRIB regulations.
The indictment is merely an accusation and the defendant is presumed innocent until proven guilty. Second-degree crimes carry a sentence of five to 10 years in state prison and a criminal fine of up to $150,000; third-degree crimes carry a sentence of three to five years in state prison and a criminal fine of up to $15,000, while fourth-degree crimes carry a maximum sentence of 18 months in prison and a $10,000 fine.
Deputy Attorney General Thomas G. Tresansky, Jr. presented the case to the grand jury. Detectives Suzanna Lopez and Janessa Jones coordinated the investigation, with assistance from Investigator Greg Nolan.
Acting Insurance Fraud Prosecutor Iu noted that some important cases have started with anonymous tips. People who are concerned about insurance cheating and have information about a fraud can report it anonymously by calling the toll-free hotline at 1-877-55-FRAUD, or visiting the Web site at www.NJInsurancefraud.org. State regulations permit a reward to be paid to an eligible person who provides information that leads to an arrest, prosecution and conviction for insurance fraud.
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