State and federal officials are continuing their efforts to hold accountable those behind the illegal multi-employer welfare arrangement (MEWA) operation that sold a purported alternative to actual workers’ comp coverage. So too, is the federal magistrate handling a separate case against founder Marcus Asay for tax and disability fraud.
Federal prosecutors secured a conviction against Asay, finance head Antonio Gastelum, and the American Labor Alliance in June for multiple counts of felony fraud. Asay was convicted on 18 counts, while ALA was convicted of the 16 counts it faced. Gastelum was convicted of mail fraud and conspiracy to commit mail fraud related to a pension scheme but was found not guilty of another mail fraud charge related to a letter telling ALA’s clients not to give any information to investigators.
Sentencing on the charges is scheduled for next month, but before that occurs, the defendants are expected to file for a judgment of acquittal and a new trial. The parties stipulated that the motion is due by September 13th, with the government’s response due on October 4th, and the defendant’s reply brief is due a week later.
The sentencing date of October 21st remains unchanged.
Tax Fraud Case
U.S. Magistrate Barbara McAuliffe is handling the separate income tax fraud and Social Security disability benefits fraud case against Asay. The U.S. Attorney charged Asay with filing false income tax returns, omitting roughly $300,000 taken out of ALA for his benefit. The indictment alleged Asay caused the company to spend $50,000 on dating service websites, $126,000 to cover rent for his lakefront home, and over $40,000 withdrawn by check from ALA’s coffers.
The indictment also alleged that Asay was collecting approximately $1,700 a month in disability benefits while working full-time for ALA and earning $1,000 monthly from the company. His dependent also collected roughly $900 per month from the disability program, according to the indictment.
Judge McAuliffe has been pushing the parties to set a trial date for the case. She had ordered them to come up with a trial date by September 4th, but instead, the parties filed a stipulation to continue a September 11th status conference until December. The parties cited defense counsel Anthony Capozzi’s busy trial schedule, which included defending the original fraud case against Asay, Gastelum, and ALA. As a result, “attorney for Marcus Asay has not been able to review the discovery nor prepare for a jury trial,” the parties wrote.
Judge McAuliffe was not having it and ordered them to resolve the issue by this week’s status conference, which she says will go on as scheduled. “The stipulation for a continuance is denied. The parties shall be prepared to pick a trial date and may pick a date which allows time for the defendant to review discovery,” the court held.
State Penalty
Before either federal action was initiated, the California Department of Insurance attempted to take down the operation. The Department issued multiple cease and desist orders against ALA and its alter ego, Omega Community Labor Union. After administrative hearings found that the parties were operating illegally, the Department levied a penalty of over $4 million.
The defendants failed to pay the penalty, and the state filed a complaint in Fresno Superior Court to collect on the debt. That case is now set to go to trial early next month.
Recent filings, however, indicate that a trial may not be necessary. The parties say they are in settlement discussions, but no final resolution has been announced.
Workers’ Comp Executive’s extensive past coverage of the fraudulent operations – it broke the story – is available in its Investigations section by clicking here.