State Secures Plea In Massive Workers' Compensation Fraud Case
Attorney General Spitzer and Workers' Compensation Fraud Inspector General John H. Burgher today announced that the owner of more than 20 gas stations, convenience marts and car washes in the lower Hudson Valley has pleaded guilty to a felony in connection with a scheme to defraud the New York State Insurance Fund (NYSIF) of nearly $600,000.
Musa Eljamal, 57, of Ardsley, pleaded guilty to Fraudulent Practices, a class "E" felony. Courtesy Mobil, Inc., a corporation Eljamal controls, also pleaded guilty to two counts: Insurance Fraud in the Second Degree, a class "C" felony; and Fraudulent Practices. The pleas were entered before the Hon. Thomas J. Dolan, in Dutchess County Court. Sentencing is scheduled for February 14, 2003.
"Our investigation revealed a coordinated effort to secure inflated profits by defrauding the Insurance Fund and cheating employees," said Attorney General Spitzer. "Thanks to the collective efforts of law enforcement we have eliminated a massive fraud."
Workers' Compensation Fraud Inspector General John H. Burgher said: "Governor Pataki created the Office of Fraud Inspector General to send a message that fraud will not be tolerated. In exploiting their employees, the State Insurance Fund and the people of New York State, these law breakers have proven yet again that if you are intent on defrauding the workers' compensation system you will be caught and prosecuted. All of the agencies involved deserve credit for their painstaking work in bringing this matter to a conclusion."
Musa Eljamal and his son, Sammy Eljamal, 28, of Purchase, own and operate gas stations, convenience marts, and car washes in the Bronx, Dutchess, Orange, Putnam, Rockland, Ulster, and Westchester counties, many of which are Mobil Oil company franchises.
In his plea, Musa Eljamal admitted to having been the person in charge of the companies' payroll records and admitted to paying company employees "off-the-books." He also admitted that over a nine-year period beginning in 1993, he created false payroll records and submitted these records to the Insurance Fund as the basis of the company's workers' comp-ensation insurance. Investigators calculated the cost of the Eljamals' fraud at $596,582.64.
In a separate agreement with the Attorney General, Sammy Eljamal has agreed to be liable with his father, and Courtesy Mobil, Inc, for repayment to the State Insurance Fund. Under this agreement $200,000 must be paid to the State Insurance Fund before Musa Eljamal is sentenced. An additional $200,000 payment is due six months after sentencing, with the balance due on February 14, 2004. Failure to abide by the payment schedule would result in Musa Eljamal receiving a state prison sentence.
Additionally, Musa Eljamal will no longer have any duties pertaining to payroll records or providing information to insurance companies, and is divesting himself from any Mobil Company franchises held exclusively in his name.
Both men have also acknowledged that their businesses failed to pay overtime to hourly employees working more than 40 hours a week. Musa Eljamal, Sammy Eljamal and Courtesy Mobil, Inc. are obligated under the agreements to pay time and a half overtime compensation to any of their employees who were not properly paid during the time period coinciding with the investigation.
The case was brought to the attention of the Attorney General's Office by the City of Newburgh Police Department. In February 2002, investigators from the Attorney General's Office and the New York State Police simultaneously executed search warrants throughout the Hudson Valley seizing numerous business and payroll records. This evidence was subsequently analyzed by a team of auditors from the Workers' Compensation Board, Office of Fraud Inspector General; and the New York State Insurance Fund.
The case is being prosecuted by Assistant Attorney General Christopher P. Borek of the Criminal Prosecutions Bureau. Investigator Michael Battisti of the Attorney General's Office led the investigation with assistance from Assistant Inspector General of Audit Michael V. McCarry of the Workers' Compensation Inspector General's Office, and Ida Ong of the State Insurance Fund, Investigator William Murphy of the New York State Police Special Investigations Unit, Benedict Emengo and Joseph Yasinski of the State Insurance Fund and Sondra Lavine of the Attorney General's Office.