On March 23, 2015, Margaret Mathes, 67, Boseba Prum, 47, Sam Pich, 63, and Thaworn Promket, 52, were sentenced by Judge Mark L. Wolf to jail for mail fraud involving submitting false workers’ compensation premium audits to Granite State Insurance Company (“Granite State”), conspiracy to defraud the Internal Revenue Service (“IRS”), and to violating laws against structuring monetary transactions to avoid reporting requirements of case transactions over $10,000. (“money laundering”).
The defendants’ guilty pleas in in August 2014, were the subject of an Agency Checklists article on September 9, 2014, entitled, Four family members plead guilty to defrauding IRS and Granite State Insurance.
At sentencing, the judge also ordered the defendants to pay restitution to Granite State and the IRS of over $6 million dollars and entered a separate forfeiture judgment of $17,812,041 based on the defendants’ admissions of money laundering and mail fraud.
Defendants’ temporary employment agencies submitted fraudulent payroll numbers to insurer and IRS
The defendants ran a temporary employment scheme in Lowell that operated under various business names between 2004 and 2009, providing short-term and long-term labor for client companies in the packaging and food services industries.
The defendants fraudulently reported to Granite State Insurance and the IRS $2,230,725.54 in employee payroll for the businesses. But, they did not report to Granite State or the IRS an additional $25,876,149.82 in wages paid to their workers.
As a result, the unincorporated businesses avoided paying $880,545 in workers compensation insurance premiums but also $5,138,200.03 in federal withholding. In order to keep the scheme, the defendants illegally structured thousands of withdrawals from various bank accounts to avoid making reports of cash transactions exceeding $10,000. These structured and staggered unreported cash withdrawals totaled $16,931,496.
All involved in fraud sentenced to prison for specific periods of incarceration
At the sentencing on March 23, 2015, each defendant received a jail sentence based upon their part in the fraud scheme.
- The ringleader, Margaret Mathes, received a jail sentence of 80 months to be served.
- Mathes’ daughter, Boseba Prum, was ordered to serve 24 months in federal custody.
- Prum’s brother-in-law, Sam Pich received the same sentence of 24 months custody.
- Prum’s husband, Thaworn Promket, received a sentence of custody for 1 year and 1 day.
Each of the defendants also must serve an additional 3 years of supervised release under special conditions after they have served their prison sentences.
The federal prison system has not provided for parole from prison since the 1980s. Prisoners serving more than one year in prison do get 54 days a year of good time for every year they serve without infractions. As a result, prisoners who demonstrate good behavior serve approximately 87% of their total sentence. In Ms. Mathes’ case, with good behavior, she would have to serve approximately 70 months on her 80 month sentence.
Defendants ordered to pay restitution of $6 million and to forfeit $17 million
In addition to the jail sentences and the subsequent supervised release, Judge Wolf ordered the defendants to pay restitution. The restitution order included $880,545 for the unpaid workers compensation premiums owed to Granite State and $5,138,200.03 owed to the Internal Revenue Service for unpaid taxes. The individual restitution orders were: Ms. Mathes, $6,018,745.03; Ms. Prum, $6,582,663.03; Sam Pich, $6,018,745.03; and, Thaworn Promket $6,146,178.03.
Above and beyond the restitution order, the indictments for mail fraud and money laundering had allegations putting the defendants on notice that the United States would seek a forfeiture “of any property, real or personal, that constitutes, or is derived from, proceeds traceable to the commission of such offenses.”
Based upon the defendants’ pleas of guilty to those offenses and the admission of the underlying facts, Judge Wolf also entered an order that “The Defendants, jointly and severally, shall forfeit to the United States the sum of $17,812,041 in United States currency.”
This additional judgment against the defendants jointly and severally consisted of the $16,931,496 involved in the defendants’ money laundering conspiracy and the $880,545 that the defendants defrauded Granite States by use of the mail. [pullquote]Based on recent surveillance, it appears that Margaret Mathes and her codefendants have either fabricated or severely exaggerated Mathes’ mental deterioration.[/pullquote]
Government obtains enhanced sentence because of false or exaggerated claim of Alzheimer’s disease
Federal courts use a comprehensive set of sentencing guidelines that attempt to avoid disparate treatment of criminals with similar crimes and background. The guidelines have base sentences that the Court may enhance or depart downward from based upon individual factors relating to the defendant’s particular crime or personal circumstances.
In its initial sentencing memorandum, United States Attorney requested that Ms. Mathes receive a reduced sentence of 48 months based on her evidence that she had been recently diagnosed with Alzheimer’s disease.
Although at the time the US attorney made the recommendation, Ms. Mathes seem fully functional her doctor had stated that according to her daughter [Defendant Plum] Ms. Mathes “could not complete a meal by herself” and that Ms. Mathes “was involved in 2 motor vehicle accidents one totaling her car . . . and is no longer allowed to drive. . . . She is now living with daughter.”
Additionally, the doctor’s notes submitted stated that Ms. Mathes’ cognitive tests administered during her diagnostic visit showed mediocre scores and that she apparently “was unable to draw [a] clock and had difficulty with serial category naming.”
On March 20, 2015, three days before sentencing the government submitted a supplemental memorandum alleging that “Based on recent surveillance, it appears that Margaret Mathes and her codefendants have either fabricated or severely exaggerated Mathes’ mental deterioration.”
Following Ms. Mathes’ claims of substantial mental deterioration, government agents conducted surveillance of Ms. Mathes daily activities. The surveillance videos obtained showed that:
- Mathes was apparently living alone and independently at her original address;
- was actually driving alone driving around Lowell daily without incident;
- had not totaled her car, but was in fact driving the same vehicle registered to her since September 2014.
Additionally the documentary evidence obtained by the government showed that between September 2014 and January 2015, Ms. Mathes was able to send 27 wire transfers through Western Union from three different offices in Lowell to locations in Cambodia and South Africa.
Finally, in a filing prompted by the Court’s inquiries as to Ms. Mathes’ competence for purposes of sentencing, her federal public defender confirmed that she saw “no reasonable cause” to believe that Mathes was incompetent.
The U.S. Attorney’s office announcement regarding the sentencing hearing stated that the Court imposed a sentence enhancement on both Mathes and her daughter for obstructing sentencing and for aiding and abetting obstruction of sentencing by exaggerating Ms. Mathes’ symptoms to her doctor, to their lawyers, to the Probation Department and the Court.
Reporting to Jail in May but appealing sentence
All of the defendants were given until May 4, 2015, to report to the institutions designated for the service of their sentences.
Judge Wolf revised Ms. Mathes’ conditions of release to deem her in the custody of her daughter Ms. Prum and stated that if Ms. Mathes violates any condition of her release, the court will likely revoke the release of Prum, Promket, and Pich, as well as Mathes
The day after her sentencing Ms. Mathes filed an appeal of the sentence to the Court of Appeals for the First Circuit.
Agency Checklists plans to follow this appeal.
