The U.S. Attorney’s Office for the Eastern District of California is continuing to press charges of conspiracy, mail fraud, and money laundering against the two principal operatives of American Labor Alliance – founder Marcus Asay (see photo) and finance officer Antonio Gastelum. Now, however, Workers’ Comp Executive has learned that federal officials are preparing to file additional charges in the case which stems from a secret grand jury investigation and a Spring 2017 raid on the ALA offices by the Federal Bureau of Investigations.
American Labor Alliance claimed to provide ERISA benefits that supplanted traditional workers’ comp insurance or self-insurance and insisted that it was immune to state regulation. It sold heavily into the ag and staffing industries.
The California Department of Insurance issued multiple cease-and-desist orders as well as millions of dollars in penalties to no avail. Department of Industrial Relations officials say they do not accept its certificates as evidence of valid workers’ comp coverage. But refuses to shut down the employers who are in the program. Workers’ Comp Executive has broken multiple stories about the operation, and complete coverage can be found here.
The exact nature of the new charges is not yet public. At deadline as federal officials say the investigation is ongoing. Officials, though, did say that they expect the new charges to generate extensive additional discovery in a case that, at the federal level, is over a year old and at the state level generated a cease and desist order more than 3.5 years ago.
Speculation is that the new charges could be related to the continued operation of the plan through ALA’s alter ego – Omega Community Labor Association. Omega started selling the purported workers’ comp program as American Labor Alliance’s operations were being shut down. Omega assumed the clients, finances, and liabilities of the prior program.
As with ALA, California Department of Insurance officials issued Omega a cease and desist letter ordering it to halt operations. Omega challenged the order, and an administrative hearing was held last fall. A decision is still pending in the case, but sources say it should be coming in a couple of months.
Still pending is ALA’s challenge of a $4.3 million penalty. A Fresno Superior Court heard that case, and the issue is currently under submission.