Owners of Annandale drywall company charged with insurance fraud, theft by swindle
The owners of a Minnesota drywall company have been charged in connection to a workers' compensation fraud scheme, according to the Hennepin County Attorney's Office.
A release from the attorney's office says Leroy Mehr and Joyce Mehr, the owners of Merit Drywall, have been charged with two counts of insurance fraud and one count of theft by swindle.
According to a criminal complaint, the Mehrs defrauded workers' compensation providers by misclassifying employees as independent contractors.
When the company was audited by Federated Insurance to review their workers' compensation policy, Joyce Mehr provided records that falsely claimed their business had 11 employees, while dozens of workers were independent subcontractors, according to the complaint.
During its investigation of Merit Drywall, the Commerce Fraud Bureau used confidential informants. One informant told investigators he didn't need to provide identification to work for the company and that he was always paid in cash. Another informant said Joyce Mehr had set him up with a company email address and created a business for him by registering a company name with the Minnesota Secretary of State.
The complaint said the Commerce Fraud Bureau was able to find three companies that Joyce Mehr had paid for online.
When the Commerce Fraud Bureau executed a search warrant at Merit Drywall, investigators were unable to find contracts between the company and independent contractors. Instead, investigators found invoices from employees the company had classified as independent contractors, according to the complaint.