Mass. Drywall Contractor Plastered on Fraud Charges

A Brockton, Massachusetts drywall contractor was sentenced to 364 days in the House of Correction after pleading guilty to 21 indictments, including workers’ compensation insurance fraud, larceny, failure to pay unemployment tax contributions, and various prevailing wage offenses, Attorney General Tom Reilly announced. His corporation pleaded guilty to 31 similar indictments.

James H. Dormon, 48, of Foxboro, and his company, Dormon Construction Co. Inc., headquartered in Brockton, each pleaded guilty in Plymouth Superior Court in Brockton to three counts of failure to pay a total of $82,000 in prevailing wages.

In addition, Dormon Construction pleaded guilty to four counts of workers’ comp fraud and four counts of larceny for reportedly defrauding CNA insurance out of at least $150,000 in workers’ comp insurance premiums. Both Dormon Construction and Dormon pleaded guilty to a count of larceny for defrauding Arbella Insurance out of $3,000 in premiums for a general liability insurance policy. Finally, Dormon Construction and Dormon each pleaded guilty to four counts involving a failure to pay more than $37,000 in unemployment taxes.

Judge Carol Ball sentenced Dormon to 364 days in the House of Correction with four years of probation, staying the execution of the sentence for 30 days. Judge Ball also ordered Dormon Construction to pay $150,000 in total restitution, with Dormon Construction and Dormon to pay $50,000 within 30 days.

Dormon Construction, a drywall installation company, operated as a subcontractor on a number of public and private building projects across Massachusetts during 1998, including the Hamilton-Wenham High School, Marlboro Middle School and Topsfield Public Library.

Dormon reportedly failed to pay the state minimum prevailing wage to numerous employees who performed various tasks in drywall construction, including framing, hanging and taping drywall. State law requires that employees working on most taxpayer-funded construction projects be paid a state-set special minimum wage. Contractors accepting taxpayer funds must agree to pay this rate.

For their work, Dormon’s employees were paid only a fraction of the prevailing wage. Dormon failed to pay his employees approximately $82,000 in wages.

CNA Insurance Company insured Dormon Construction Co. Inc. for workers’ comp insurance between 1997 and 2001. Workers’ comp insurance is required under Massachusetts law and provides benefits for employees who are injured while working. Premiums are determined based in part on the amount of payroll reported by the company to their insurance provider.

CNA’s annual policy premiums were based on a percentage of Dormon’s reported payroll during the policy period. On four separate occasions in 1998, 1999, 2000 and 2001, Dormon reportedly provided CNA Insurance Company auditors with incomplete accounting data in an effort to avoid additional insurance premiums that would have resulted from reporting a larger payroll. Dormon concealed at least $1.5 million in payments over four years by excluding certain employees from the company’s payroll register. As a result, Dormon avoided additional workers’ comp insurance premiums of at least $150,000.

Similar conduct also reportedly occurred in 1997, when Dormon understated his payroll to Arbella Insurance to avoid approximately $3,000 in premiums on his general liability insurance policy. The company also failed to disclose its complete payroll in quarterly reports to the Massachusetts Division of Employment and Training and, as a result, evaded unemployment taxes of more than $37,000.