On April 12, 2019, the FBI arrested, Tam Vuong, 43 of Worcester on a two-count complaint alleging Mr. Vuong committed wire fraud involving, in part, his having falsely reported employee numbers and wages in his role overseeing UT Services, a Worcester temporary employment agency.
Mr. Vuong is no stranger to insurance fraud. In 2010, he pleaded guilty to a 66-count state court indictment in his operation of another Worcester temporary employment agency, Labor Solutions, Inc. In that case, the Massachusetts Attorney General had also charged Mr. Vuong with workers compensation insurance premium fraud.
Federal charges allege misrepresentation of employee numbers and wages
According to the federal criminal complaint, in his role overseeing and controlling UT Services, Mr. Vuong falsely told UT Services’ insurance carrier that the company had only one employee and an annual payroll of only $50,000. However, UT Services, had, at least, twenty-three employees, if not more and a significantly higher payroll. UT Services paid most of its workers in cash as part of a scheme to under report wages, and thus fraudulently minimize its workers’ compensation insurance premium.
According to court documents, Vuong previously operated other employment agencies, including Prime Labor Services, which had revenues of more than $25 million. These other temporary employment agencies allegedly also underreported their wages.
Arrest affidavit details a shell game of temporary staffing companies
The affidavit of an FBI Special Agent, in support of the federal complaint against Mr. Vuong, states that he was involved with the operations of Precision Labor Services, an employment agency with revenue exceeding $10.5 million between 2009 and 2014. Then between 2012 and 2017, he had operated Prime Labor Services, LLC. During this time, Prime underreported its wages and employees to underpay its taxes and insurance premiums. The affidavit alleges individuals affiliated with Mr. Vuong cashed more than $25 million in client company checks for Prime Labor.
In November 2017, Mr. Vuong shifted operations from Prime Labor Services to UT Services, a newly incorporated company. The Special Agent’s affidavit stated that the transfer of Prime Labor’s clients to UT Services likely resulted because of federal agents executing search warrants relating to Prime Labor early in November 2017.
Although UT Services reported to its workers’ compensation insurer that it only had one employee, records obtained from payroll services showed that UT Services had at least twenty-three employees and a substantial payroll. The Special Agent averred the affidavit that “UT Services fraudulently concealed its true payroll and thus fraudulently minimized its insurance premiums.”
The federal affidavit alleges false workers’ compensation insurance certificates issued
The Special Agent’s affidavit also documented that UT Services run by Mr. Vuong
would obtain an authentic certificate of insurance for one particular client and would then falsify such document to create forged and fraudulent certificates of insurance, which UT Services would then disseminate to other clients to serve as proof of workers’ compensation insurance.
These bogus certificates assisted UT Services’ fraudulent concealment and underreporting of its true number of employees and payroll and enabled UT Services to obtain and maintain numerous clients without disclosing the workers and payroll associated with these clients to its insurance agency or Travelers Insurance.
2010 insurance fraud guilty plea results in probation and $500 thousand in restitution
In 2008, Labor Solutions, Inc. was a Massachusetts was a domestic corporation owned and operated by Mr. Vuong. Labor Solutions sole business was to supply temporary workers to several light manufacturing facilities in and around Worcester County.
During April of 2008, the Massachusetts Attorney General initiated an investigation of the Labor Solutions and Mr. Vuong. Following the investigation, a grand jury indicted Mr. Vuong and his company on a sixty-six-count indictment for violating various wage laws as well as the commission of insurance and tax fraud.
As part of its investigation, the Attorney General discovered that the Labor Solutions, over several years, had collected over $20 million from its clients and paid its employees at least $20 million in cash wages, although the Attorney General believed both numbers were substantially higher. As per the new federal charges, Mr. Vuong had failed to disclose to its workers’ compensation carrier the true payroll or number of workers that Labor Solutions employed.
The estimated premium loss to Mr. Vuong’s workers’ compensation insurance carrier, was estimated at more than $500,000 in suppressed premiums.
When Mr. Vuong personally pleaded guilty to fifty-nine counts, the Attorney General recommended a sentence of 3 to 5 years in state prison, with three years of probation to follow, and an order of restitution of $1.3 million. However, the sentencing judge placed Mr. Vuong on probation for five years and ordered that he pay $500,000 in restitution as a condition of probation.
Twenty-year sentence permitted for wire fraud
Based on the Special Agent’s affidavit detailing Mr. Vuong dedication to his chosen profession of insurance fraud, Mr. Vuong may not garner as light a sentence as he copped in state court in 2010.
The complaint against Mr. Vuong charges two counts of wire fraud. Each count of wire fraud carries a sentence of no greater than 20 years in prison, up to three years of supervised release and a fine of up to $250,000.
A federal district court judge imposes federal sentences after a conviction or guilty plea based on the U.S. Sentencing Guidelines and other statutory factors. However, federal sentencing guidelines tend to favor relatively lengthy prison sentences for defendants who have demonstrated they have not learned anything from prior convictions.
The federal prosecution team on the Vuong case includes the Insurance Fraud Bureau
The announcement of Mr. Vuong’s arrest was made by the United States Attorney for the District of Massachusetts, Andrew E. Lelling; Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Office; Kristina O’Connell, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston; and Anthony DiPaolo, Chief of Investigations, Insurance Fraud Bureau of Massachusetts. Assistant U.S. Attorney Bill Abely of Lelling’s Criminal Division is prosecuting the case.