A Rockville Centre business owner and his Queens-based construction company pleaded guilty to insurance fraud related to a workers’ compensation scheme that defrauded the New York State Insurance Fund of more than $600,000 in premiums, Nassau County District Attorney Anne T. Donnelly announced Tuesday.
Mahendranauth Khargie, 36, and his company, GC Stud Inc., pleaded guilty on Oct. 21 before Judge Robert Schwartz to Insurance Fraud, a D felony. The company also pleaded guilty to Effect of Failure to Secure Compensation under the New York Workers’ Compensation Law, an E felony.
Khargie and the company are scheduled for sentencing on Dec. 2. As part of the plea, Khargie must pay $625,000 in restitution to NYSIF prior to sentencing. If he fails to pay in full, he faces a prison sentence of two to six years. GC Stud Inc. also faces $6,000 in fines.
“This calculated scheme of underreporting millions of dollars of payroll to defraud the state’s insurance system was a deliberate effort to gain an unfair advantage over businesses doing things the right way,” Donnelly said. “When employers cheat the system, they put workers at risk. We will continue to work with our state partners in holding business owners accountable when they try to undermine the integrity of systems put in place to help employees.”
Donnelly said audits conducted by NYSIF Premium Fraud Investigators revealed that Khargie and his company underreported more than $3.5 million in payroll over three policy periods between April 2019 and March 2022, leading to the underpayment of policy premiums.
As a NYSIF policyholder, Khargie was required to submit financial records annually, including income and payroll. Investigators found the defendants hid large payments from three steel and iron fabrication companies by depositing funds into a JPMorgan Chase account not disclosed to auditors.
“This guilty plea and significant restitution serve as a powerful deterrent to any business attempting to cheat the workers’ compensation system,” said NYSIF Executive Director and CEO Gaurav Vasisht. “NYSIF is committed to ensuring a level playing field for the thousands of honest employers in New York State.”
Khargie was arrested Sept. 4 in Mineola by the Nassau County District Attorney’s Detective Squad.
The case is being prosecuted by Senior Assistant District Attorney Taylor Cain of the Major Financial Frauds Bureau, under the supervision of Bureau Chief Maureen McCormack and Executive Assistant District Attorney for the Investigations Division Rick Whelan. Khargie and GC Stud Inc. are represented by Joseph Nohavicka, Esq.
