The FBI doesn’t normally go around looking for victims, the victims usually go to the FBI, but there is a fraudulent organization that has been taking advantage of businesses and the FBI is seeking help. Massive insurance fraud may be brewing in light of this investigation.
The American Labor Alliance and its affiliates, which include the “ALA Trust,” the “ALA Retirement Plan Trust” and the “ALA Retirement Plan and Trust” may all be frauds. Not only have they taken money for Workers Compensation Insurance, but they also offered healthcare insurance, fraudulent financial services (including tax preparation) and legal services such as incorporation. They marketed themselves as a labor organization and stated that their customers could receive services as a benefit of joining.
So far “ALA” has been penalized $4.3 for selling workers’ compensation and liability policies without being properly licensed. While the company contends it has done nothing wrong, according to the State of California, ALA may have offered workers’ compensation coverage that might not offer coverage. More than 1,000 victims have been identified to date. They may have been conducting fraud since 2011.
Web of Deceit
The American Labor Alliance is based near San Francisco and at least two of its executives have been charged with money laundering and mail fraud. There are 14 counts against them.
The “web” is intricate. The American Labor Alliance has a sister company, CompOne USA. Both of those entities are subsidiaries of Agricultural Contracting Services Association. Though they do business out of headquarters in Clovis, California, they are registered in Nevada as a not-for-profit corporation.
ALA likes to describe itself as a “union labor organization.” They conduct business in California, New York, and Georgia. The Agricultural Contracting Services Association nor its subsidiaries are licensed by the California Department of Insurance.
According to the FBI, the American Labor Alliance had what amounted as a handful of employers who bought their policies prior to 2016. It then announced it was going to offer Workers Comp insurance and one year later membership exploded to 400 employers with 30,000 members.
There is a clue to this fraud. Nearly 70% of those who got covered was up to 50,000 seasonal agricultural workers who worked for 50 farm labor contractors. However, ALA was never a nonprofit certified labor organization. They were under no set regulations and they never registered. They merely collected money. As they were unlicensed, they put every employer and their employees at risk. There are tens of thousands of farm employees unaware that if they get seriously injured on the job, they could be without coverage.
Taking Advantage
There is a terrible irony to this scandal. Farm workers are at the lowest end of the labor spectrum in terms of salary, knowing their rights, and for the most part, being able to adequately express themselves in the English language. At the same time, workplace safety statistical data consistently shows that of all professions, farm workers are most likely to be injured on the job. Farm work is dangerous work.
The executives at the American Labor Alliance intentionally created a fraud and at the same time, knowingly placed tens of thousands of workers in jeopardy. Massive insurance fraud may be brewing, ethically, did it matter to them?
There was an opportunity here to take advantage of seasonal farm workers many of whom are powerless. The insurer knew it. They were working without protection. I would submit it is as racist and as inhumane as financially fraudulent.
How could the executives at ALA rationalize the fact that they were obscuring the facts about the coverage from all they pretended to be safeguarding? Perhaps it was greed that drove them, the insatiable need for cash. When this fraud is fully realized, how much damage will have been done? I don’t mean financial damage, I mean badly injured workers who won’t or can’t claim a dime? What about them?
Unless those who purport to provide insurance are also subject to ethical as well as legal scrutiny, it is a risk that many workers and employers might continue to take.
