Minnesota drywall company charged with major swindle scheme

The construction company intentionally categorized employees as contractors.
Author:
Publish date:
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

Willmar Police Department

'Errant bullet' goes through garage wall, kills Willmar man

The man was working in his garage when he was shot, witnesses said.

Screen Shot 2021-01-16 at 10.59.00 PM

Wild tie Kings with 2 seconds left, win in overtime

Another incredible finish for the Wild.

Screen Shot 2021-01-16 at 6.53.17 PM

Mike Lindell's MyPillow offering discounts using the code 'Qanon'

The Shakopee-based company is under the microscope because of the recent actions of its owner.

Surly Brewing

Facing aluminum can shortage, Surly unveils solution: 'Cantyhose'

The brewery came up with a creative way to repurpose unused cans.

Liam Robbins

Gophers stay perfect at home by crushing 7th-ranked Michigan

Liam Robbins and Marcus Carr were too much for the previously undefeated Wolverines.

police lights

Four teens arrested over robberies in Minneapolis

They teens were found in a vehicle that was taken during an earlier carjacking.

Boundary Waters/BWCA

All BWCA visitors will now have to watch three 'Leave No Trace' videos

Visitors left an "unacceptably high amount" of damage last year.

ambulance

Ten fatal overdoses in past 6 weeks reported in region of northern MN

Law enforcement agencies have issued a plea to the general public.

u.s. district court minnesota - federal court minneapolis

Bracing for security threats, federal courthouses closing in Minnesota

Security is also being ramped up at the state capitol.

N95 mask

3M sues Florida company that sold 10K counterfeit N95 masks to HCMC

The Maplewood company has obtained a temporary injunction against the firm.

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.

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.

U of M prof punished for 'outrageous scheme' to swindle wife during divorce

The 57 year old lied about how much was in his retirement account.

money, cash, $100

Charges: Defense lawyer swindled client out of $15,000

She claimed he faced 15-20 years in prison.

Tamara Gretz

Charges: Employee stole $470K to support her essential oils firm

The 49-year-old has a history of fraud and theft.