A Massachusetts cleaning company owner who was sentenced in October 2019 to a year in jail with six months to serve for worker’s compensation fraud now faces similar charges in Rhode Island. See Agency Checklists’ article of October 29, 2019, “Mass. Cleaning Co. Owner Will Serve 6-Month Jail Term For $74,000 Workers’ Compensation Fraud.”
New charges for worker’s compensation fraud and nonpayment of wages
Rhode Island Attorney General, Peter F. Neronha, announced this week that his Office had charged Marcello Pompa, 37, of Saugus Massachusetts, the owner of M&M Cleaning of MA, LLC (M&M Cleaning) with failing to maintain workers’ compensation insurance coverage, workers’ compensation insurance premium fraud, and wage theft.
Charges arose out of cleaning contract for state college campuses
The new charges, contained in a criminal information, arise from M&M Cleaning’s cleaning contract with the Community College of Rhode Island (CCRI). Under Rhode Island court rules, the Attorney General may, in most felony cases, file an information alleging criminal conduct instead of seeking an indictment by a grand jury.
CCRI is the largest public educational institution in Rhode Island and the largest community college in New England. Every year, CCRI enrolls nearly 20,000 students at four campuses in Warwick, Lincoln, Providence, and Newport.
M&M Cleaning won a contract to provide cleaning services for CCRI’s Lincoln, Providence, and Warwick campuses. Between 2017 and 2019, M&M Cleaning employed approximately twenty-five workers to provide these college campuses with cleaning services.
On October 18, 2019, CCRI sued M&M Cleaning along with others in the Rhode Island Superior Court. On March 14, 2019, the company went out of business. As alleged in the criminal information filed against Mr. Pompa, employees had noticed issues occurring with their pay: irregularities on their paystubs, payments on different days, and even salaries being paid by personal checks from Mr. Pompa as opposed to the business.
Worker pay complaints and investigation uncover insurance violations by Mr. Pompa
After the company’s closure, sixteen employees of the company complained that Mr. Pompa failed to pay them $10,885.00 in wages due for work performed between March 4, 2019, to March 15, 2019.
Further investigation by state agencies determined that during the course of the contract with CCRI, Mr. Pompa failed to maintain any workers’ compensation insurance from December 1, 2017, to September 22, 2018, covering the M&M employees working on the CCRI campuses.
Also, the state’s investigation found that in 2018, Mr. Pompa falsely reported to his insurance carrier in 2018 that M&M Cleaning had an estimated annual payroll for the previous year of $10,000. However, Rhode Island tax records showed that M&M Cleaning reported paying $388,311 in wages for that year.
Based on the complaints, the tax evidence, and the insurance records, the Attorney General’s Office filed an eighteen-count criminal information against Mr. Pompa charging him with:
- One count of failing to maintain workers’ compensation insurance coverage for his employees.
- One count of fraud based on falsely reporting payroll information to his workers’ compensation insurance company: and,
- Sixteen counts of wage theft.
Mr. Pompa is scheduled to be arraigned in Providence County Superior Court on July 17, 2020, at 9:30 AM.
Kenneth C Zirkel Creative Commons Attribution Share Alike 40 International license
Mr. Pompa’s case was investigated by the Attorney General’s BCI Investigation Unit and the Department of Labor and Training. It is being prosecuted by Special Assistant Attorney General Carole McLaughlin.
Premium fraud gave Mr. Pompa’s company a bidding advantage
As a result of his false audit report of a nominal annual payroll, Mr. Pompa’s misrepresentation allowed M&M Cleaning to lower it business operating expenses by reducing the workers’ compensation insurance premium owed to its insurance carrier
Similar to what occurred in Massachusetts, Mr. Pompa’s premium rate fraud allowed his company, M&M Cleaning, to keep its business expenses artificially low, and, thereby, gain an advantage in bidding for cleaning contracts, like the one at CCRI, against competing cleaning companies that paid all their workers’ compensation premiums.
In the prior Massachusetts indictments against him, the Attorney Generals’ Office alleged that during the years 2010 until 2016, Mr. Pompa’s company M&M Cleaning, Inc. (M&M) engaged in a scheme in which it falsely claimed the use of three subcontractors to reduce the premiums for its worker’s compensation insurance. The Attorney General alleged that Mr. Pompa’s false claims of using sub-contractors for work from M&M resulted in the concealment of more than $2.8 million in M&M’s payroll. As a result, the cleaning company evaded paying upwards of $74,000 in worker’s compensation insurance premiums.
As a result of this alleged intentional worker misclassification, Mr. Pompa’s company, M&M, was able to win municipal contracts throughout Massachusetts by offering substantially lower bids for their cleaning services than their competitors during the public bidding process.
On October 7, 2019, Middlesex Superior Court Judge Laurence Pierce sentenced Mr. Pompa to one year in the County House of Correction with him having to serve six months, and the remaining six months of the jail sentence suspended for two years.
Besides incarcerating Mr. Pompa, Judge Pierce also ordered that Mr. Pompa repay the $74,000 in workers’ compensation insurance premiums he defrauded his Massachusetts insurer of as restitution. The judge further ordered that Mr. Pompa, upon his release, not perform any work on municipal contracts or participate in any municipal bidding process for two years.
