How a Labor Supplier and Insurance Broker Scammed to Evade Workers’ Compensation

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An unlicensed labor broker for the construction industry has pleaded guilty plea to participating in a fraud scheme in order to evade more than $1 million in workers’ compensation premiums.

According to Manhattan prosecutors, Salvador Almonte, Jr. underreported the size of his companies and lied to insurance carriers about the work being performed by his employees. They said he was aided in his deception by former insurance broker Steven Asvazadourian who admitted his guilt in 2020, and the scheme left more than a hundred construction workers underinsured.

Manhattan District Attorney Alvin L. Bragg, Jr., New York City Department of Investigation Commissioner Jocelyn E. Strauber and New York State Inspector General Lucy Lang announced the guilty plea by Almonte.

Prosecutors said Almonte operated a multi-million-dollar construction labor supply business in New York City as an unlicensed labor broker. His companies – including Power Services Solutions, Power Services of New York, South Side Services, Inc., and North Star Strategy, Inc. – provided workers to construction companies.

Almonte and Asvazadourian were indicted in 2019.

According to the indictment, with the help of Asvazadourian and his insurance brokerage, the Dorian Agency Ltd., Almonte evaded more than $1 million in premiums from the NYSIF alone.

“This unlicensed labor broker prioritized saving money on insurance premiums over protecting his workers, leaving them and their families with inadequate or zero coverage for job-related injuries and fatalities,” said Strauber.

Almonte admitted in court that from January 2015 to late 2018 he made false representations to insurance carriers, including NYSIF, to secure workers’ compensation insurance coverage at fraudulently reduced prices. Almonte evaded premiums by misrepresenting the true size and work being performed with the help of Asvazadourian.

Workers’ compensation insurance premiums are based on a company’s annual payroll and the risk involved in the type of work done by its employees. For instance, Almonte would tell insurance companies that cleaning or interior carpentry tasks were being done while his workers were engaged in high-rise superstructure projects.

Once a form of coverage was established for Almonte’s businesses, or even when no coverage was in place, Asvazadourian and other employees of the Dorian Agency generated fraudulent certificates of insurance, which Almonte sent to his clients as proof that he had adequate workers’ compensation insurance to cover the construction workers he provided.

But that was not always the case. “The workers’ compensation fraud perpetrated here left contractors to do a dangerous job without the financial safety net they deserve, while also undermining the system for all New Yorkers,” said Lang.

Over the four years, more than a dozen of Almonte’s workers were injured on the job, according to court records.

One of these workers suffered significant injuries when he fell 10 feet on a construction site and landed on top of an exposed piece of capped metal rebar. This worker spent months unable to complete necessary medical treatment and had to wait almost a year for disability payments that should have been paid to him following his injuries, prosecutors said.

A second employee, who had to leave his job after suffering a head injury when he was struck by a large piece of wood, waited more than 14 months for disability pay while the board attempted to determine the identity of his employer in order to establish the responsible insurer carrier, prosecutors added.

At times, Almonte supplied labor for projects completed by SSC High Rise, Inc., which pleaded guilty to manslaughter in the second degree in 2018 for causing the death of construction worker Juan Chonillo, prosecutors said.

Prosecutors also said Almonte refused to cooperate with the New York State Workers’ Compensation Board after injured workers submitted claims for their work-related injuries. His refusal to acknowledge that he employed the injured workers meant the board could not assign insurance coverage and disability pay delayed for workers.

Almonte pleaded guilty to insurance fraud in the second degree and fraudulent practices in violation of Workers’ Compensation Law. He will be required to pay $500,000 in restitution to the state-backed workers’ compensation insurer, the New York State Insurance Fund (NYSIF), and will be sentenced to five years’ probation.

According to prosecutors, Almonte’s co-defendant, Asvazadourian, pleaded guilty in August of 2020 to insurance fraud in the second degree and to making false statements in procuring workers’ compensation insurance. He paid $100,000 to the NYSIF and carried a sentence of three years’ probation, 800 hours of community service and permanently surrendered his insurance broker license.

Workers’ Compensation

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