Employment Agency Owner Jailed 2 Years For Insurance And Tax Offenses Fraud

Agency Checklists previously reported on the guilty plea of Tam Vuong, 46, to three counts of federal tax and fourteen counts of insurance fraud resulting from his role in overseeing various Worcester-based employment agencies. See Agency Checklists’ article of August 17, 2021, “Worcester Temp Employment Owner Pleads Guilty To Workers’ Compensation And Tax Fraud.

On December 13, 2021, U.S. District Court Judge Timothy S. Hillman sentenced Mr. Vuong to 25 months in federal prison and three years of supervised release on his August guilty plea to the eighteen counts.

$30 million in cash flowed through Mr. Vuong’s employment agencies

Vuong oversaw Prime Labor LLC and UT Services, Inc., which were employment agencies based in Worcester. Each agency paid a few employees by check but paid most employees in cash. Each agency failed to report or pay taxes on the wages paid in cash, which Vuong fraudulently concealed in tax filings and insurance audits. Vuong concealed millions of dollars in cash wages that were paid to Prime Labor workers and additional cash wages paid by UT Services. Between 2012 and 2017, more than $30 million in Prime Labor client company checks were cashed at a check-cashing business in Worcester; Prime Labor paid millions of these dollars in cash wages.

Insurance premium fraud of $354 thousand and a tax loss of $3 million

Although all this cash flowed through Prime Labor and UT Services to make under-the-table payments to workers, Mr. Voung did not report most of these wages to either the IRS or to the workers’ compensation insurer, Travelers.

Mr. Voung underreported his companies’ payroll while in his role overseeing and controlling Prime Labor and UT Services. For example, Mr. Vuong told, Travelers that the UT Services had only one employee and an annual payroll of only $50 thousand when UT Services had dozens of employees and a significantly higher payroll. When Travelers canceled UT Services’ workers’ compensation policy, UT Services delivered forged certificates of insurance to several clients to hide from them that the company had no workers’ compensation insurance.

A full audit of Prime Labor and UT Services’ employee compensation showed that Mr. Vuong’s companies had defrauded Travelers of $354 thousand in premiums by their underreporting of employees’ cash compensation.

The same figures led the United States to claim that Mr. Voung’s companies’ underreporting payroll led to the loss of $3.1 million for federal tax purposes.

Repeat offender on employment agency insurance and tax fraud

In seeking incarceration, the United States Attorney argued to the court for Mr. Voung’s incarceration for the full twenty-seven months allowed in the plea agreement.

Their major points for the government seeking the maximum sentence were that:

  • Mr. Vuong and his former temporary employment agency were convicted in the Massachusetts Superior Court in 2010 for offenses relating to the failure to report millions of dollars in cash wages and related tax and insurance fraud.
  • Mr. Voung did not receive a prison sentence, but the state court ordered him not to operate or participate in any temporary employment agency for five years.
  • Shortly thereafter, Mr. Vuong began operating another temporary agency that relied heavily on cash payroll, hiding behind a nominee owner and using family members to cash checks to hide his participation.
  • After the FBI served search warrants in November 2017, it became clear that Mr. Voung again had an employment agency engaging in a cash payroll scheme. Caught a second time, he then set up a different temporary worker agency using his father as a front and hiding his control of the company by using a false identity.

Mr. Voung’s sentencing memorandum asked for the low end of the sentencing guidelines or incarceration for seventeen months. The judge’s sentence was incarceration for two months less than the prosecution requested and eight months more than the defense asked.

Restitution and forfeiture hearing scheduled with $166 thousand already seized

At sentencing, Judge Hillman also ordered Mr. Vuong to pay restitution to Travelers Insurance and to forfeit to the United States the amount of his insurance fraud. The judge set a hearing date for January 26, 2022, to determine the restitution and forfeiture amount. Under the law, Mr. Vuong’s restitution will be the $354 thousand in premium of which he defrauded Travelers, and his forfeiture to the United States will equal the value of the proceeds traceable to the offenses he committed. Thus, the forfeiture should equal the $3.1 million in taxes plus the $354 thousand in insurance premiums or approximately $3.45 million.

At present, the United States has seized and seeks to forfeit $166 thousand in a brokerage account held in Mr. Voung’s mother’s name that was opened in February 2014 apparently by Mr. Voung.

Mr. Voung reports to prison on February 28, 2022

Judge Hillman allowed Mr. Vuong to continue his $5,000 unsecured personal bond until he self-surrenders to start his prison sentence on February 28, 2022.

Under the Federal Bureau of Prison system, there is no parole. Prisoners must serve their full sentences, with the only credit being for incident-free incarceration or “good time.” The good-time allowance, if earned, can reduce the time served on a federal sentence by about fifteen percent.

In Mr. Vuong’s case, this good-time reduction would allow him to start his three-year supervised release after one year and nine months served.

The prosecution team involved in Mr. Vuong’s case

The prosecution team announcing Mr. Vuong’s sentencing included Acting United States Attorney Nathaniel R. Mendell; Joseph R. Bonavolonta, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division; Joleen D. Simpson, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation; and Anthony DiPaolo, Chief of Investigations of the Insurance Fraud Bureau of Massachusetts. The Assistant U.S. Attorneys directly involved in prosecuting Mr. Vuong are William Abely, Chief of Mendell’s Criminal Division, and Assistant U.S. Attorney Adam Deitch of Mendell’s Criminal Division.

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