Safety and OSHA News

Owner sent to prison for workers’ comp fraud

The owner of an electronics recycling company in New Jersey has been sentenced to three years in prison for saying warehouse employees performed only clerical duties when obtaining workers’ compensation insurance. 

Albert Boufarah, owner of Supreme Asset Management Recovery (SAMR) in Lakewood, NJ, was sentenced after pleading guilty to second-degree conspiracy and insurance fraud. The company was fined $100,000 for defrauding an insurance carrier out of nearly $598,282 in workers’ comp coverage from January 2011 through June 2014.

Boufarah and SAMR are also liable for restitution to the insurance company, New Jersey Casualty, a subsidiary of New Jersey Manufacturer’s Insurance Company.

SAMR and Boufarah admitted conspiring with officials at The Amato Agency LLC, an insurance agency in Neptune, NJ, to misclassify warehouse workers as office staff on insurance applications to obtain much lower premiums.  Between 50 and 72 employees who were classified as office workers actually performed higher-risk jobs such as disassembling and refurbishing TVs, computers and other electronic devices.

Also charged in the scheme:

  • Donna DeMartino, an official at SAMR, who pleaded guilty to third-degree insurance fraud and was sentenced to two years of probation
  • Joseph Amato II, owner of The Amato Agency, is charged with conspiracy, insurance fraud, theft by deception and misconduct by a corporate official, all in the second degree, as well as fourth-degree false swearing, and
  • two agents at The Amato Agency who face similar charges.

“Lying to their insurance carrier to save money on premiums turned out to be very costly,” said New Jersey Attorney General Christopher Porrino. “The sentence imposed on them should act as a deterrent to others tempted to cut business costs by breaking the law.”

“Employers who manipulate the insurance system to avoid paying their fair share drive up insurance costs for everyone and put honest businesses at a competitive disadvantage,” said Acting New Jersey Insurance Fraud Prosecutor Christopher Iu.

This isn’t SAMR’s first run-in with regulators. In 2009, environmental regulators proposed fining the company $490,500 in part for receiving crushed fluorescent bulbs that contained toxic mercury.

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