Federal prosecutors are finally ready and going to trial against Marcus Asay and Antonio Gastelum. They are accused of committing fraud as part of running the “MEWA” known as American Labor Alliance and its claimed workers’ comp alternative CompOneUSA. They expect a month-long jury trial. It is slated to begin in March.
The U.S. Attorney indicted ALA’s founder Asay and finance manager Gastelum more than two years ago. The charges stemmed from a secret grand jury proceeding and an FBI raid of their operations. A superseding indictment came down last fall and built on the original conspiracy and mail fraud charges levied against ALA, Asay, and Gastelum. It adds two money laundering charges against Asay and wire fraud. The feds are also seeking criminal forfeiture of at least $2.8 million through the case.
The federal action is in addition to ongoing cases by the California Department of Insurance against ALA and its successor Omega Community Labor Alliance. The state is pursuing a $4.3 million penalty from the original cease and desist action against ALA. MEWA officials claim the organization lacks the money. Also pending is Omega’s challenge to the state’s cease and desist order against it for operating without a certificate of authority.
Starting with ALA and later with Omega, the officials claimed that the workers’ comp program they sold employers was exempt from state oversight because of the federal Employee Retirement Income Security Act (ERISA) rules. They claimed to be a bona fide labor organization operating as an entity claiming exception (ECE) under the multi-employer welfare arrangement (MEWA) regulations.
HOWEVER, the MEWA’s claims were upended when the United States Department of Labor confirmed it is not a legitimate union. Then, a CDI administrative law judge held they were subject to state oversight. The ALJ also found that Omega, which took over the CompOneUSA accounts, was an alter ego of ALA.
Sources indicate that there is at least one other offshoot now operating under the same modus operandi.
Brokers who used the program have been sued. See [Broker Sued Over MEWA].