In 2007 California’s State Fund for Workers’ Compensation sued a company named Onvoi Staffing alleging that Onvoi had bilked them out of over eight million dollars in unpaid premiums dating back to 2002 and 2003.
Then it got interesting.
During the discovery phase of the case State Fund realized that Select Staffing a professional staffing organization, was using their relationship with Onvoi Staffing to piggyback on their policy and score a lower rate.
Basically, Onvoi’s X-mod was 63% in 2003 and 93% in 2002. Compare that with Select Staffing’s 260 and 256 for the same period. Select then piggybacked on Onvoi’s lower rate and, according to the case, defrauded State Fund out of $30 million. The settlement added another $20 million in damages to that for a total of $50 million big ones.
After State Fund stopped doing business with them, Onvoi transferred what was left of their company to Mainstay Business Solutions in 2004 and pretty much went out of business.
Still with me? Good.
Mainstay Business Solutions was then taken over by the state of California, getting its bank accounts seized by Employment Development Department which claims it is owed $16.4 million bucks. Mainstay Business Solutions then transferred its accounts to…. Wait for it…. Select Staffing.
Shell game? Conspiracy?
We know what State Fund thinks. It’s RICO time. RICO, the Racketeer Influenced and Corrupt Organizations Act is used to bust organized crime and according to State Fund this crime is organized. In 2007 Select Staffing, feeling the heat transferred 80 million dollars to CEO Steven Sorenson and then claimed that they were insolvent.
According to the suit:
“By reason of such Transfers, and unless such Transfers are avoided or other appropriate relief is granted as circumstances may require, State Fund suffered, and will suffer, damages proximately caused by such Transfers in an amount to be proven at trial,” the complaint says, alleging that the transfers were made “with malice, oppression and intent.”
In other words they hid the money deliberately. And you thought Workers’ Comp was dull.