On May 23, 2017, a Suffolk County grand jury indicted Christopher Rapczynski, 48, of Andover on 12 felony counts and one misdemeanor count arising out of Mr. Rapczynski’s manipulation of his companies’ workers’ compensation insurance to avoid paying premiums.
Mr. Rapczynski is co-owner and president of Sleeping Dog Properties, 1745 Washington Street, Boston, a Massachusetts corporation founded in 1997. He is also the owner and president of New England Construction Resources, Inc., also at 1745 Washington Street, Boston, a New Hampshire corporation, formed in 2006, admitted to do business in Massachusetts as a foreign corporation in 2008.
In announcing Mr. Rapczynski’s indictment, Attorney General Maura Healey said, “When businesses fail to carry workers’ compensation insurance it endangers their workers and raises costs for all other businesses.” The Attorney General emphasized, “We will continue to work with the Insurance Fraud Bureau to investigate and prosecute those who engage in this type of fraud for their own benefit.”
New England Construction Resources set up to “lease” employees of Sleeping Dog Properties after bad claims experience ups premiums
The investigation leading to Mr. Rapczynski’s indictment found that between 2004 and 2006, Sleeping Dog Properties had 11 claims filed under its workers’ compensation policies. These claims resulted in an adverse adjustment of the company’s experience modification factor and a dramatic increase in Sleeping Dog Properties’ workers’ compensation premiums.
This indictment shows the commitment by the Insurance Fraud Bureau and Attorney General Healey’s office to combat this type of fraud.
Mr. Rapczynski allegedly responded to the premium increase by not paying for any more workers’ compensation insurance for Sleeping Dog Properties. Instead, he formed a second company, New England Construction Resources, in New Hampshire to employ construction foremen and supervisors who New England Construction Resources supposedly “leased” for construction projects. The investigation of Mr. Rapczynski’s companies, however, resulted in allegations that New England Construction Resources did not employ or insure the actual workers on these various projects.
Hidden payroll scheme to avoid paying workers’ compensation premiums
Based on their investigation, the authorities alleged that New England Construction Resources and Sleeping Dog Properties were the same employer, and that Mr. Rapczynski set up New England Construction Resources for the sole purpose of hiding Sleeping Dog Properties’ worker remuneration records from payroll auditors. And the authorities further alleged that Sleeping Dog Properties had annual payrolls of hundreds of thousands of dollars for employed construction workers while carrying no workers’ compensation insurance.
Indictments based on Mr. Rapczynski misleading premium auditors and avoiding $66,747 in workers’ compensation premiums
To conceal his payroll scheme, authorities allege Mr. Rapczynski deliberately misled auditors by not disclosing that Sleeping Dog Properties had no workers’ compensation insurance. Because the auditors accepted these false representations, Mr. Rapczynski and New England Construction Resources avoided paying $66,747 in workers’ compensation premiums.
Based on Mr. Rapczynski alleged actions and misrepresentations about his companies’ workers’ compensation insurance, the grand jury’s true bill charged him with:
- six counts of workers’ compensation fraud;
- five counts of grand larceny; and
- one count of failure to provide workers’ compensation insurance.
Insurance Fraud Bureau referred Mr. Rapczynski case to the Attorney General
Insurance Fraud Bureau investigates and refers allegations against Mr. Rapczynski’s companies to Attorney General for prosecution
The Insurance Fraud Bureau’s Chief of Investigations, Anthony M. DiPaolo, said of Mr. Rapczynski indictment:
The Insurance Fraud Bureau’s Workers’ Compensation Unit vigorously pursues premium evasion cases because it places a financial drain on the system and creates an unfair playing field for dishonest businesses…This indictment shows the commitment by the Insurance Fraud Bureau and Attorney General Healey’s office to combat this type of fraud.”
Indictments charge felonies for workers’ compensation fraud and grand larceny
In Massachusetts, by statute: “A crime punishable by…imprisonment in the state prison is a felony. All other crimes are misdemeanors.” Twelve charges against Mr. Rapczynski allege felonies and one charge alleges a misdemeanor.
The workers’ compensation statute, M.G.L. c. 152, § 14(3) makes it a felony to:
knowingly make any false or misleading statement, representation or submission …for the purpose of obtaining…coverage, or…[to] knowingly misclassif[y] employees or engage in deceptive employee leasing practices for the purpose of avoiding full payment of insurance premiums…”
Violating §14 carries a state prison sentence of up to five years or a jail sentence of “not less than six months nor more than two and one-half years” and a fine of up to $10 thousand. And the same statute provides that
A person found guilty of violating this section [§14(3)] shall, in all cases, upon conviction, in addition to any other punishment, be ordered to make restitution for any financial loss sustained to an aggrieved person as a result of the commission of the crime…”
The grand larceny indictment also charges a felony since conviction carries a possible state prison sentence of up to five years as well as a fine of up to $25 thousand.
Failing to provide workers’ compensation insurance violates G.L. c. 152, § 25C (5), which provides:
…an employer who fails to provide for insurance or self-insurance as required by this chapter shall be punished by a fine of not more than one thousand five hundred dollars or by imprisonment for not more than one year, or both.”
Since violating this statute does not allow for a sentence to state prison, a violation is a misdemeanor.
Sleeping Dog Properties claims to be “one of Boston’s leading design and build firms”
Sleeping Dog Properties website claims that, “As one of Boston’s leading design and build firms, we provide skilled planning and construction services for residential and commercial properties” and lists the company’s services as:
- Custom Home Building;
- Construction, including Construction Management, Construction Labor Services, Millwork, Lifestyle & Estate Management
Mr. Rapczynski’s LinkedIn page describes Sleeping Dog Properties as a company that “designs, builds and renovates unique custom homes, boutique commerical (sic) spaces and luxury living spaces” with the company’s “primary market is the Boston and Metro West area.”
Attorney General’s Office and Insurance Fraud Bureau worked jointly
AG Healey’s Insurance and Unemployment Fraud Unit works to protect consumers and the integrity of the insurance system by investigating and prosecuting those who commit fraud against all types of insurers, including the commonwealth’s unemployment insurance and workers’ compensation systems.
Assistant Attorney General Kristy Lavigne is prosecuting the case against Mr. Rapczynski aided by Kimberly Medeiros of Attorney General Healey’s Insurance and Unemployment Fraud Unit and investigators at the Insurance Fraud Bureau.
Attorney General Healey’s Insurance and Unemployment Fraud Unit has among its charges the responsibility of protecting the integrity of the commonwealth’s insurance system by investigating and prosecuting crimes involving fraud against any insurer or insurance system, including unemployment and workers’ compensation insurance.