New You can now listen to Insurance Journal articles!
The owners of a Fort Myers roofing company that has been the subject of a number of consumer complaints and has filed multiple assignment of benefit lawsuits against property insurers have pleaded guilty to more than $1 million in tax evasion.
David T. Aaron and Russell Ultes, co-owners of Marlin Construction Group LLC, cashed millions of dollars in customer checks at check-cashing companies to understate revenue and avoid federal taxes, federal prosecutors said last week. The men also used the cash to purchase luxury items for themselves, including jet skis and cars, according to criminal charges.
“Together, Aaron and Ultes caused the IRS a tax loss of over $1.4 million,” the U.S. Department of Justice said in a press release.
The men face up to five years in prison, claims for compensation and fines.
Marlin Construction Group is well known to some property insurers in Florida. Court filings show the firm filed at least three AOB lawsuits in 2018 and 2019 against Hartford Insurance Co., Metropolitan Casualty Insurance Co., and Church Mutual Insurance Co. All were brought to federal court and settled by 2021. Marlin records also show up to 15 lawsuits in Collier County in recent years against Castle Key Insurance, United Property & Casualty Insurance Co., FedNat Insurance, Avatar, First Protective, St. Johns and other property insurers.
The roofing and construction company has also seen more than 20 complaints filed against it with the Better Business Bureau. Some customers accused the company of not completing roofing work, leaving leaks in the roof, or causing other damage to property. And in 2021, WINK TV news in Fort Myers reported that an investigator from Citizens Property Insurance Corp. recorded a Marlin employee intentionally damaging roof shingles on a home.
An affidavit from the investigator notes that “citizens had a previous suspicious allegation with Marlin alleging that an employee, TJ McCowan, allegedly damaged roofing materials with Marlin and exaggerated the damage prior to the surveyor’s arrival,” the news channel reported.
The Florida Department of Financial Services was investigating the matter, and another Marlin employee told investigators McCowan was instructed how to damage the roof so the homeowner would be eligible for a new roof, which would be paid for by the insurance company, WINK reported .
Aaron and Ultes could not be immediately reached for comment.
The problem of tax evasion and check cashing is not unknown in the construction industry, prosecutors said. Here’s how it worked: Marlin Construction was an “S” corporation based in Fort Myers. Companies organized under Subchapter S of the US tax code are considered “flow-through” entities, with all profits and losses passed on to their shareholders, court documents show.
Marlin was owned by Samber Contracting LLC, owned by Ultes, and DNC Holdings LLC, owned by David Aaron. Instead of properly reporting the Marlin company’s 2018-2020 earnings, Aaron and Ultes cashed more than $3 million in checks from customers, the criminal information documents allege.
The men then provided false information to Marlin’s tax advisors and falsified their own personal tax returns, prosecutors said.
Official documents don’t say whether the company also understated payroll to reduce workers’ compensation premiums, a common problem in the US construction industry. The records of the Florida Division of Workers’ Compensation indicate that no disability insurance records were found for Marlin Construction Group.
Marlin and Aaron hold active contractor licenses under the State Department of Business & Professional Regulation. No license information could be found for Ultes or Samber Contracting.
subjects
Florida
The most important insurance news, every working day in your inbox.
Get the proven newsletter of the insurance industry
www.insurancejournal.com
https://www.insurancejournal.com/news/southeast/2023/04/17/716726.htm
