A Wisconsin resident was caught misappropriating funds from a workers’ compensation insurance business he operated. He was convicted of mail fraud and had been taking money from the insurance business for his own personal use, which left a lot of employers and their workers without insurance coverage when the business went under in 2007.

Gregory Chmielewski set up a professional employer organization in 2003, first called Independent Management Resources (IMR) and later Management Resources Group (MRG). He partnered with the Fort Independence Community of Paiute Indians, and told employers that he could offer a low-cost workers’ compensation coverage option that was based off California’ system, but claims would be managed through the Tribe’s  sovereign system and not California’s laws. He attracted employers with low rates but when the company went under in 2007 he left 117 injured workers hanging, with $1.8 million in unpaid claims. Many of those employees were in construction, where a lack of insurance can be devastating because those injuries can be severe.

He controlled several other companies and he diverted more than $7.3 million from MRG accounts into those companies. He was caught after an investigation from the United States Postal Inspection Service in coordination with the Internal Revenue Service, Criminal Investigation and the California Department of Insurance. He was sentenced to three years and five months in jail.

Cindy S. Chen was the Acting Special Agent in Charge from the IRS Criminal Investigation unit. She said that his actions “harmed those that needed his help during a time they were very vulnerable.”

Insurance Commissioner Dave Jones said, “While Chmielewski lined his pockets with the money he stole from California employers, he left workers without the workers’ compensation benefits and medical treatment they needed and deserved.”