Skip to main content

Minnesota drywall company charged with major swindle scheme

The construction company intentionally categorized employees as contractors.
Screen Shot 2020-01-21 at 11.45.12 AM

A Minnesota construction firm is being charged with insurance fraud and theft by swindle, after its owners allegedly pocketed hundreds of thousands of dollars by not paying for workers compensation insurance.

Hennepin County Attorney Mike Freeman and Department of Commerce Commissioner Steve Kelley announced three charges filed against Leroy and Joyce Mehr, former owners of Merit Drywall in Clearwater.

According to Freeman, the company would list otherwise full-time employees as independent contractors, thus negating the requirement for the company to buy workers compensation insurance.

Workers compensation insurance is mandatory for Minnesota companies with some exceptions, with Freeman saying the "intentional miscategorization put at least $300,000 in the pocket of Mr. and Mrs. Mehr."

He said that that fraud such as this is "not new" but "it's rarely seen on the level we have here."

"It cheats workers from the healthcare insurance they're entitled too, it cheats insurance companies who are supposed to provide the coverage, and thirdly it cheats companies who compete with the fraudulent corporation, because they can bid cheaper or take more money home," Freeman said.

Kelley said that the owners of Merit Drywall were involved in an "elaborate scheme to enrich themselves, defraud their insurance provider of tens of thousands of dollars, and leave their employees unprotected."

Sign up: Subscribe to our BREAKING NEWS newsletters

Fortunately for the company's employees, none of them got hurt on the job and as such they didn't need to make a claim for workers compensation.

But Freeman said that not only did the company not classify employees properly, they would actively assist their workers to apply for licensure with the state as contractors, so they could "perpetuate the fraud."

"The case against the former owners of Merit Drywall shows the strength of the construction community when we stand together and demand action when workers complain of wage theft and worker misclassification," said Dan McConnell, business manager of the Minneapolis Building and Construction Trades Council.

"Our members have lost their patience with those developers and general contractors who have profited from schemes like the one alleged here. Together, the Building Trades Unions will do everything we can to continue to assist in ensuring that those who are complicit in the exploitation of workers are held accountable."

Next Up

28987158675_df8dbfc6df_o

3 dead after plane crashes into house in Hermantown

Two people in the house were uninjured.

FeDh7pUWAAg3NMd

Destructive fire at Maple Grove greenhouse and nursery

The fire burned early Sunday morning at a longtime Maple Grove greenhouse and nursery.

st. cloud state university hockey

SCSU player hospitalized after being taken off ice on stretcher

Luedtke was checked into the boards in the first period and down for a reported 10-15 minutes.

Amber alert wisconsin

Amber Alert in Wisconsin: Search for missing 15-year-old girl

Police believe 15-year-old Kryssy King may be with a 22-year-old man.

Screen Shot 2022-10-01 at 10.18.12 AM

3 St. Paul fast food restaurants robbed in space of an hour

The thieves struck between 7:15 p.m. and 8 p.m.

Screen Shot 2022-10-01 at 9.06.40 AM

What to do with the Kmart site? Minneapolis wants your ideas

The project will connect Nicollet Avenue south of Lake street and north of the Midtown Greenway, reestablishing a street grid.

Screen Shot 2022-10-01 at 7.53.55 AM

Crowd evacuated at end of homecoming football game in Brooklyn Park

Police blamed 'unruly teens' in the stands and some who were trying to enter the stadium.

gas

State to help 44 Minnesota gas stations add E15 pumps

The yellow 88 button is coming to more gas stations in Minnesota.

Screen Shot 2022-09-30 at 4.54.42 PM

FBI, police investigating bank robbery at Edina's 50th and France

An ATM technician was robbed by four men at a U.S. Bank.

Ethan Glynn

Paralyzed Bloomington football player begins rehabilitation in Colorado

Ethan Glynn is at a world-renowned rehabilitation hospital.

Related

Drywall

Husband and wife sentenced for fraud scheme through their drywall firm

The Annandale pair bilked an insurance company out of more than $300,000.

Solar power

Energy company CEO charged with theft-by-swindle totaling $1M

He's accused of making 'false promises' to provide and install solar panels.

Jail handcuffs arrest

Man pleads guilty to fraudulent COVID relief scheme that netted $250K

The 34-year-old from Duluth is awaiting sentencing.

Charges: Mayo Clinic staffer's mileage swindle cost hospital $72,000

The 50-year-old has been charged with theft-by-swindle.

money, cash, $100

MN man charged with fraudulently obtaining $841,000 in COVID-19 PPP loans

He applied for the loans for a business that had been shut down in 2018.

money, cash, $100

Former clerk charged with embezzling $650K in Township funds

The 70-year-old is accused of misappropriating funds.