The convicted founder of an illegal workers’ comp scheme has now agreed to plead guilty to tax and disability fraud charges to receive a lesser sentence on these charges. Marcus Asay signed the plea agreement before rather than going to trial later this month on charges that he filed false income tax returns and committed social security benefits fraud.
Asay was the founder, owner, and operator of Agricultural Contracting Services Association, which also did business as American Labor Alliance. The companies sold a purported alternative to California workers’ comp coverage under the names CompOneUSA and CompassPilot, which he alleged were exempt from state regulation.
Several California brokers failed to verify the claims and were taken in by the MEWA scheme. It appeared to offer cheap rates and provided the illegal “coverage” to their clients. Several faced and lost lawsuits over the coverage.
Asay was convicted last year for running the workers’ comp fraud scheme. He was convicted on all 18 felony counts filed against him, including mail fraud and money laundering. Asay was also convicted of selling fake Affordable Care Act hardship exemptions and running a fraudulent pension scheme. He received a five-year prison sentence for these charges and appealed the case to the Ninth Circuit. Opening briefs are due later this year.
In the plea agreement, Asay noted that he applied for Social Security disability benefits in 2010 for himself and his dependent. He attested that he did not earn more than $1,000 a month. From May 2015 to May 2019, however, he admitted working for ALA full-time and earning more than the federal limit, knowingly failing to report the earnings to the SSA, and continuing to accept the benefits.
Asay also admits in the plea agreement that he caused ALA to pay for over $300,000 of his personal expenditures from 2016 to 2018 but did not report the money as income on his tax returns for those years. Prosecutors say Asay caused the company to spend roughly $50,000 on dating service websites that he used. ALA also spent $126,000 to cover the rent on Asay’s personal residence. The indictment also noted that over $40,000 was withdrawn from ALA’s bank accounts via checks written out to and cashed by Asay.
The plea agreement calls for Asay to pay up to $130,000 in restitution and a $200 special assessment, but otherwise imposes no financial penalties. The government agreed to recommend that Asay be able to serve whatever jail time the court imposes concurrently with his sentence from the earlier case.
Following the filing of the plea agreement, the U.S. District Court for the Eastern District of California reassigned the case to Judge Dale A. Drozd, who had handled the earlier case. Judge Drozd will review the plea deal and determine sentencing at a future date. Attorney Anthony Capozzi represented Asay in the proceedings, while Assistant U.S. Attorney Joseph Barton signed the plea deal for the government.