Massachusetts Attorney General Says Scheme Resulted in Thousands of Dollars in Fraud
James Lydon, 63 has pleaded guilty to charges that he committed worker’s compensation fraud by failing to accurately report his total payroll, number of employees and by classifying his business improperly according to Massachusetts law. He is the owner of James Lydon, Sons & Daughters (Lydon & Sons), a roofing and siding company based on Nantucket.
The guilty plea came in response to a Special Statewide Grand Jury which returned indictments against Mr. Lydon on January 24th. He was then arraigned in front of the Suffolk Superior Court where he pleaded guilty and was sentenced.
“Premium avoidance is a serious crime that undermines the insurance system and puts lawful employers at a disadvantage,” said Attorney General Coakley in response to Mr. Lydon’s guilty plea. “The prosecution of these schemes prevents the increase in insurance premiums that often result from these crimes.”
According to the AG’s office, Lydon & Sons was insured by Travelers Companies, Inc. (Travelers) from November 2000 through November 2008 and by Liberty Mutual from November 2008 through November 2010 and to the present. In an effort to evade high insurance premium claimed the Attorney General’s team, Lydon misrepresented to his insurance companies the true number of employees and misclassified the work performed by his employees.
In reality and contrary to reports made to his insurance providers, Lydon employed at least four full-time between 2005 and 2009 and misclassified the work of his company during the same period. As a result of this premium avoidance scheme, Lydon underpaid his workers’ compensation insurer thousands of dollars in premium payments.
Based on these misrepresentations, Lydon was granted the minimum premium rate on his policy. As a result, both Travelers and Liberty Mutual were unknowingly put at risk to covery any of Lydon’s undisclosed employees who were not disclosed for injuries that occurred or may have occurred during the policy periods.
Upon pleading guilty to five counts of Workers’ Compensation Fraud, Mr. Lydon was sentenced Lydon to two years of probation and ordered him to pay a lump sum of $42,000 in restitution.