SACRAMENTO, Calif. — On August 19, 2016, a federal judge sentenced Gregory J. Chmielewski, 46, to three years and five months in prison for using funds from his insurance business for his personal use.
"This case is another shining example of California Department of Insurance investigators working together with federal agencies to see that all employees are protected by workers' compensation should they need it and that those ripping off employees, businesses, or funds, are brought to justice," said California Statewide Law Enforcement Association (CSLEA) President Alan Barcelona.
According to court documents, between September 2003 and September 2007, Chmielewski defrauded his clients and their employees in a workers’ compensation coverage scheme. Chmielewski set up a professional employer organization called Independent Management Resources (IMR), later operating under the name Management Resources Group (MRG), which he operated from Healdsburg until relocating to Roseville in 2006.
He solicited an Indian tribe to partner with him to provide employee insurance coverage and other employee services at a reduced cost. Chmielewski marketed the insurance coverage to California employers as a low-cost alternative to workers’ compensation coverage, and he claimed that it was modeled after the California workers’ compensation statutes except that claims were made and adjudicated under the Tribe’s sovereign system. Because of the low rates, Chmielewski was successful in obtaining employers as clients.
Chmielewski diverted and misappropriated millions of dollars from MRG accounts for his personal use. He caused more than $7.3 million to be paid out of MRG’s accounts to other unrelated companies that he controlled. Eventually, the company experienced serious cash flow problems and was forced to cease operations, leaving approximately 117 injured workers with approximately $1.8 million in unpaid claims.
“While Chmielewski lined his pockets with the money he stole from California employers, he left injured workers without the workers’ compensation benefits and medical treatment they needed and deserved,” said California Insurance Commissioner Dave Jones. “Thanks to the hard work of our investigators at the Department of Insurance and our law enforcement partners in the U.S. Attorney’s Office, Chmielewski’s crimes were exposed, and he has been brought to justice.”
Chmielewski, currently of West Bend, Wisconsin, was sentenced for mail fraud.
This case was the product of an investigation by the United States Postal Inspection Service; the Internal Revenue Service, Criminal Investigation; and the California Department of Insurance. Assistant U.S. Attorneys Heiko P. Coppola and André Espinosa prosecuted the case.