Empire Today (Northlake, Ill.) has filed a lawsuit against two of its former top executives, seeking $25 million in damages, according to the Cook County Record. The company alleges former chief executive officer Steve Silvers and former chief financial officer Judd Feldman ran a fraud scheme that diverted millions of dollars in workers compensation reimbursements from insurance companies to their personal accounts.
According to the complaint, the pair ran the scheme from 2005 to 2011. Empire states in its suit that it used various subcontractors to install flooring and window treatments for its customers in California. As part of the arrangement with those subcontractors, Empire agreed to pay the entire cost of workers' compensation insurance premiums for those installers' employees.
The premiums for those policies, known as "retrospectively-rated" policies, were based, among other items, on an estimate of the total number of hours the subcontractors' insured employees would work during the policy period.
After actual payroll was calculated, the suit states that any overpayment made by Empire to the subcontractors was to be refunded by the insurance companies, back through the subcontractors, to Empire. However, Empire alleges in its complaint that about $5 million of those refunds never made it back to the company and were instead diverted to Silvers and Feldman via shell companies the two men had created.
The alleged scheme was uncovered earlier this year after one of the insurers filed suit against Empire's subcontractors, seeking to find out where its money was actually going.
Empire asserts that it is owed $18 million in damages under the Racketeer Influenced and Corrupt Organizations (RICO) Act, as well as $4 million it had paid Silvers and $3 million it had paid Feldman in wages and other compensation during the time the two men were allegedly running the scheme.
