Florida officials, law enforcement officers and trade groups are working to stop check cashing companies from aiding workers’ compensation fraud in the construction industry.
Officials are to investigate the role of check cashing companies in order to develop a legislative recommendations for the next year sessions.
According to the officials, schemes involve individuals who set up fake companies that apply for a workers comp. policy. Subcontractors then pay the shell company to use the policy and obtain a certificate of insurance to show general contractors they have insurance. Once the job is completed, the general contractor then writes a check to the shell company, which in turned is cashed by the check cashing company for a fee. The subcontractor and their employees are then paid in cash with the shell company taking a percentage for the use of the certificate of insurance. Florida Division of Insurance Fraud head estimated that the shell companies hid $1 billion in undeclared payroll over the last several years, which translates into $200 million in evaded workers’ compensation premiums.