Former NJ construction manager pleads guilty to workers comp fraud

A former construction company president has pleaded guilty to stealing more than $450,000 in workers compensation.

Herlindo Garcia-Merlos, 49, whose last known address was in Trenton, N.J., pleaded guilty to two counts of second-degree theft by deception for using fake and misleading information to the workers compensation insurance carrier of the now-defunct Orients Construction Company in Trenton. Garcia-Merlos stopped doing business with Orients and started doing business as Melrose Construction Inc. in March 2009.

Prosecutors said Garcia-Merlos admitted he provided the false information to New Jersey Manufacturers Insurance Group from February 2007 until April 2010. As a result of the fraud, Garcia-Merlos got reduced premiums that his company was not entitled to, with a difference of $315,680.

“This defendant was responsible for making sure that he had adequate and lawful workers’ compensation coverage for his companies,” Acting Insurance Fraud Prosecutor Ronald Chillemi said. “By providing misinformation to his workers’ compensation carrier, he not only failed in this responsibility but also defrauded an insurance company out of hundreds of thousands of dollars. The cost of such fraud is passed on to consumers through increased premiums.”

Garcia-Merlos also pleaded guilty to stealing more than $135,462 by failing to file tax returns for his companies, Orients and Melrose Construction. He also underreported wages on his individual tax returns.

Along with eight years in prison, the state will seek restitution of more than $400,000.