The head of an illegal scheme to sell a purported alternative to workers’ comp coverage and the operation’s head of finances has asked a federal district court for acquittal and a new trial after being convicted of fraud last year. The convictions of Marcus Asay and Antonio Gastelum followed a 19-day jury trial last year that culminated in their convictions. It is not an unusual move following convictions and rarely works.
Asay, founder of the Agricultural Contracting Services Association and its alter ego, American Labor Alliance, was convicted on all 18 counts brought by federal officials. Gastelum was convicted on three felony counts related to mail fraud as part of a fraudulent pension plan associated with ALA but was acquitted on other charges related to the fraudulent insurance certificates given to clients of the workers’ comp scheme.
Both claim that the evidence against them was insufficient to sustain the convictions. “In the present case, the defendants sold workers’ compensation protection and provided coverage whenever a proper claim was made. Each person received the nature of the bargain negotiated,” Asay’s attorney argues. “Nothing was taken from the alleged victims without providing the coverage bargained for.”
The product was marketed initially as CompOneUSA and later as CompassPilot.
The defendants claimed their workers’ comp product was exempt from regulations by the California Department of Insurance because it provided federal ERISA benefits instead of traditional workers’ compensation insurance. They claimed to be an entity claiming an exception to the federal multi-employer welfare arrangement (MEWA) rules. The federal Department of Labor, however, issued a letter stating that they were not a valid labor organization.
Federal officials are due to file their responses to the motions this week. The court is scheduled to handle the motions for acquittal and new trial at the sentencing hearing set for early March.
Asay also faces a separate fraud trial for income tax and Social Security disability fraud. He is charged with filing false tax returns that omitted roughly $300,000 that was taken out of ALA for his personal use and with collecting $1,700 per month in disability benefits while earning $1,000 a month working for ALA. That trial is scheduled to start in April and is expected to run for two weeks.
Our Investigations section contains many past articles covering the scheme and the state and federal efforts to shut it down.