The owner of a New Jersey electronic recycling company was sentenced on Oct. 2 to three years in prison, and his company was fined $100,000, for defrauding an insurance carrier out of nearly $600,000 in workers' compensation coverage by lying about the kind of work his employees did.

Albert Boufarah, 50, of Toms River, New Jersey, and his company Supreme Asset Management Recovery, in Lakewood, are also jointly and severally liable for restitution to the insurance company, under the sentence handed down by New Jersey Superior Court Judge Wendel Daniels.

"For these defendants, lying to their insurance carrier to save money on premiums turned out to be very costly," says the state's Attorney General Christopher Porrino.

"The sentence imposed on them should act as a deterrent to others tempted to cut business costs by breaking the law."

Boufarah and SAMR pleaded guilty last fall to second-degree conspiracy and insurance fraud.

Ill-Conceived Plan

The defendants admitted conspiring with officials at SAMR and a Neptune insurance agency, The Amato Agency, LLC, to misclassify SAMR's warehouse workers as office staff on insurance applications to obtain much lower premiums for workers' compensation coverage.

"Employers who manipulate the insurance system to avoid paying their fair share drive up insurance costs for everyone and put honest businesses at a competitive disadvantage," says acting Insurance Fraud Prosecutor Christopher Iu.

"By holding both Boufarah and SAMR responsible, we are sending a message that workers' compensation fraud is serious crime and all involved will be held accountable."

According to the charges against them, the defendants falsely asserted that all but a handful of SAMR's 50–72 employees were office workers performing clerical tasks, but most of them were warehouse workers performing higher-risk jobs like disassembling and refurbishing televisions, computers, and other electronic devices.

Coverage premiums are higher for employees performing higher risk jobs.

The scheme bilked New Jersey Casualty, a subsidiary of New Jersey Manufacturer’s Insurance Company, out of $598,282 from January 2011 through June 2014.