Former owners of Merit Drywall sentenced for insurance fraud

The Hennepin County Attorney’s Office announced Tuesday that an Annandale couple has been sentenced for their fraudulent scheme that exploited an insurance company out of more than $300,000 for workers’ compensation insurance.

According to court documents, LeRoy Mehr, 51, and Joyce Mehr, 50 — the former owners of Merit Drywall — pleaded guilty on Oct. 8 to one count each of theft-by-swindle. As part of the plea agreement, the Mehrs both faced up to 180 days in jail. At their sentencing Monday afternoon, they received 180 days of electric home monitoring and must complete 30 days of community service.

Both were fined $30,000 and must also repay their insurance provider, Federated Insurance, over $309,000 in lost premiums. The husband and wife will also be on probation for five years.

Former owners of Annandale drywall company plead guilty to theft-by-swindle

During the remote sentencing, the Mehrs apologized for their actions, and told Hennepin County Judge Regina Chu, "It will never happen again."

An investigation by the Minnesota Department of Commerce’s Fraud Bureau found that from 2016 to 2017, the Mehrs and their company, Merit Drywall, claimed that several workers, who they claimed were independent contractors, actually were their employees. Those employees should have been included when Federated Insurance was determining the cost for providing the company with workers’ compensation insurance.

Community impact statements from the Minneapolis Building and Construction Trades Council and the North Central States Regional Council of Carpenters were presented during the sentencing. Both organizations condemned the Mehrs’ conduct and observed that they contributed to a problem in the construction industry where employers are faced with the choice of engaging in similarly unlawful behavior to keep their bids competitive or losing out on projects and closing their doors.

The North Central States Regional Council of Carpenters noted that this kind of industry behavior disproportionately impacts workers of color and immigrants, according to a release.