Ex-temp owner guilty of fraud
$500,000 restitution ordered


By Gary V. Murray TELEGRAM & GAZETTE STAFF
gmurray@telegram.com

WORCESTER — The former owner of a temporary employment agency was placed on probation and ordered to pay $500,000 in restitution yesterday after pleading guilty to charges of cheating the state, hundreds of workers and an insurance company out of about $1.3 million.

Tam Vuong, 35, who owned the now-defunct Labor Solutions Inc. employment agency in Worcester, was sentenced yesterday morning after pleading guilty in Worcester Superior Court to 59 counts of violating the state’s wage and hours laws, as well as committing insurance and tax fraud. Mr. Vuong, of Worcester, also entered guilty pleas on behalf of Labor Solutions Inc. to six counts of failing to provide proper pay stubs to employees.

Authorities launched an investigation of Mr. Vuong and his company in 2008, after members of the Governor’s Joint Enforcement Task Force on the Underground Economy and Employee Misclassification began receiving complaints that Labor Solutions, which provided temporary labor services to several light manufacturing plants in Central Massachusetts, was violating state wage and hour laws, according to Attorney General Martha Coakley.

An investigation determined that many of the employees hired through Labor Solutions, all of whom were paid in cash, did not receive the minimum wage or overtime rates over a two-year period beginning in 2007, according to prosecutors. Investigators also learned that many workers were illegally charged $2 to $3 a day for transportation, thereby reducing their pay below the minimum wage level, authorities said.

From 2004 to 2008, the employment agency collected more than $20 million by providing temporary workers to client companies, while paying out about $11 million in wages, the attorney general said. The company failed to disclose the $11 million cash payroll to its worker’s compensation carrier, or to the state Department of Revenue, for purposes of unemployment insurance contributions and corporate excise tax filings, according to prosecutors.

The company was also alleged to have failed to file corporate tax returns from 2002 to 2007.

Investigators estimated the loss to the state as a result of the unemployment insurance fraud was more than $650,000. The loss to Travelers Insurance Co., the workers’ compensation insurance carrier, was estimated at more than $500,000 in unpaid insurance premiums.

Judge Janet Kenton-Walker placed Mr. Vuong on probation for 5 years and ordered that he pay $500,000 in restitution as a condition of probation.

Assistant Attorney General Kate J. Fitzpatrick had recommended a sentence of 3 to 5 years in state prison, with 3 years of probation to follow, and an order of restitution in the amount of $1.3 million. In response to a question posed by the judge, Ms. Fitzpatrick said about $200,000 of that money would go to former workers who were not properly compensated by Mr. Vuong.

Mr. Vuong’s lawyer, Brian J. Buckley, recommended the sentence that was imposed by Judge Kenton-Walker. Mr. Buckley argued that many of the people hired through Mr. Vuong’s agency were in the country illegally and did not have Social Security numbers or other documentation that would have enabled them to get jobs elsewhere.

The judge agreed, but said Mr. Vuong “took advantage ofâ€