The owner of two Worcester temporary employment agencies has pleaded guilty in federal court to federal tax and workers’ compensation fraud charges.
Plea agreement for a prison sentence between 18 and 27 months to serve
On August 5, 2021, Tam Vuong, 46, pleaded guilty to 14 counts of wire fraud involving workers’ compensation insurance and four counts of failing to pay taxes. In a plea agreement with the United States Attorney, Mr. Vuong accepted an agreed disposition which included:
- Incarceration for a period between 18 and 27 months.
- A fine within the Guidelines’ sentencing range as calculated by the court.
- Thirty-six months of supervised release after the completion of his prison sentence.
- Restitution, in an amount to be determined by the Court, for the workers’ compensation insurer involved, Travelers Corporation; and
- A forfeiture equal to the amount of the money restitution for the insurance fraud
Over $30 million in unreported cash payment flowed through Mr. Vuong’s two companies
Mr. Vuong managed Prime Labor LLC and UT Services, Inc., temporary employment agencies based in Worcester. While each agency paid a few employees by check, they paid most employees in cash. Each agency failed to report or pay taxes on the wages paid in cash, which Mr. Vuong fraudulently concealed in connection with tax filings and insurance audits.
Mr. Vuong concealed millions of dollars in cash wages paid to Prime Labor workers and additional cash wages paid by UT Services to its employees. Between 2012 and 2017, more than $30 million in Prime Labor client company checks were cashed at a check-cashing business in Worcester.
After federal search warrants were executed in November 2017 on Prime Labor, Mr. Vuong shifted operations from Prime Labor to UT Services Thereafter, he attempted to hide his control of both Prime Labor and UT Services from federal investigators.
Mr. Vuong falsely reported to Travelers UT Services had one employee and $50,000 in payroll
In addition, in his role overseeing and controlling UT Services, Mr. Vuong falsely told UT Services’ workers’ compensation insurance carrier, Travelers, that the UT Services had only one employee and an annual payroll of only $50,000. In reality, UT Services had dozens of employees and a significantly higher payroll.
When Travelers canceled UT Services’ workers’ compensation policy, UT Services forged certificates of insurance fraudulently verifying to some of its clients that it carried workers’ compensation insurance. UT Services never notified its clients that Travelers had canceled its compensation policy.
A federal grand jury indicted Mr. Vuong on the above charges in August 2019.
Sentencing for Mr. Vuong is scheduled for December 2021
U.S. District Court Judge Timothy S. Hillman scheduled sentencing for December 1, 2021. Although Mr. Vuong has entered into a plea agreement with the U.S. Attorney, federal sentences are imposed by a federal district court judge based on the U.S. Sentencing Guidelines and other statutory factors.
Mr. Vuong was previously convicted in state court for the same crimes
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.
In the 2010 prosecution, the Attorney General charged that Mr. Vuong’s company, 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. The Attorney General also charged that Mr. Vuong’s company 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.
Although the Attorney General requested a sentence of three to five years in state prison, the sentencing judge placed Mr. Vuong on probation for five years with the repayment of $500,000 in restitution to his company’s workers’ compensation carrier. See Agency Checklists’ article of See Agency Checklists’ article of April 23, 2019, “Previously Convicted Insurance Fraudster Rearrested for Premium Fraud and False Insurance Certificates“
The federal prosecution team on the Vuong case includes the Insurance Fraud Bureau
The prosecution team handling Mr. Vuong’s case and announcing his guilty pleas includes Acting United States Attorney Nathaniel R. Mendell; Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division; Ramsey E. Covington, Acting Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation; and Anthony DiPaolo, Chief of Investigations of the Insurance Fraud Bureau of Massachusetts. Assistant U.S. Attorneys Bill Abely, Chief of Mendell’s Criminal Division, Ian Stearns, and Adam Deitch of Mendell’s Criminal Division, are prosecuting the case.