Today, Attorney General Martha Coakley’s Office announced that a Worcester County Grand Jury has returned indictments against a Worcester man and his company on 66 counts of violating the Massachusetts wage and hour laws, and committing insurance and tax fraud. Tam Vuong, age 34, is charged with Willful Failure to Pay Minimum Wage (14 counts); Willful Failure to Pay Overtime (6 counts); Willful Charging a Transportation Fee That Reduces An Employee’s Daily Wages Below the Minimum Wage (2 counts); Willful Failure to Provide a Pay Stub (14 counts); Willful Failure to Furnish Employment Records to the Attorney General; Workers’ Compensation Insurance Fraud (5 counts); Unemployment Insurance Fraud (5 counts); Failure to Make Unemployment Insurance Contributions (5 counts); Larceny by False Pretenses Over $250; Willful Failure to File a Tax Return (5 counts) and Willful Aiding or Assisting in the Presentation of Fraudulent Tax Documents (2 counts). Vuong’s company, Labor Solutions, Inc. is charged with Willful Failure to Provide a Pay Stub (6 counts).

Authorities began an investigation into Vuong and his company in April 2008, after various members of the Governor’s Joint Enforcement Task Force on the Underground Economy and Employee Misclassification (Task Force) received complaints alleging that Labor Solutions was violating the Massachusetts wage and hour laws, including failing to pay the mandatory minimum wage. Investigators discovered that a substantial number of employees, all of whom were paid in cash, were not paid the statutory minimum wage or overtime rates in accordance with Massachusetts law for the period of September 2007 to September 2009. Many workers received $6.25 or $6.50 per hour; however, the statutory minimum wage was $7.50 in 2007, and later raised to $8.00 per hour as of January 1, 2008. Authorities also allege that a significant number of employees failed to receive overtime pay at one and a half times their regular wage rate for hours worked over 40 in a week. Investigators also discovered that many workers were illegally charged approximately $2.00 - $3.00 per day for transportation, thereby reducing their wages below the minimum wage. Authorities also allege that the affected workers received no paystub.

Investigators discovered that Labor Solutions operated mainly on a cash basis, and from 2004 through 2008 the company collected over $20 million by providing temporary employees to client companies, while paying out approximately $11 million in cash wages. Authorities believe that hundreds of workers were affected by Labor Solution’s illegal practices. The company allegedly failed to disclose this $11 million cash payroll to its workers’ compensation carrier, as well as to the Massachusetts Department of Revenue (DOR) for purposes of unemployment insurance contributions and corporate excise tax filings. Authorities allege that the company also never filed a corporate tax return while it was incorporated for the years of 2002 through 2007.

Investigators estimate that the loss to the Commonwealth as a result of the unemployment insurance fraud to be over $655,000. The loss to the workers compensation insurance carrier, Traveler’s Insurance Co., Inc., is estimated to be at least $509,000 in unpaid insurance premiums.

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