Business Owner Arraigned for Insurance Fraud [CORRECTED]
Business allegedly did not correctly report payroll to avoid insurance premium costs.
A Woburn business owner was arraigned on charges he failed to accurately report his total payroll or number of employees to avoid insurance premium costs last week.
Edward App, 50, was arraigned on charges of Workers’ Compensation Fraud (4 counts) and Larceny Over $250 (3 counts).
According to Attorney General Martha Coakley, App is the owner and sole proprietor of App Tree Inc. (App Tree), a tree service company based in Woburn.
The AG's office became involved in App Tree after an employee received life-threatening injuries when crushed by a falling tree. An insurance claim was filed after the incident, resulting in $700,000 being paid out by the insurance company.
According to authorities, App Tree was assigned to AIM Mutual Insurance Company (AIM) through the Assigned Risk Pool for workers’ compensation insurance in 1999.
Authorities allege that in an effort to evade high insurance premiums, App reported to AIM that he was the sole employee of the company and failed to disclose any information about additional employees. Based on his report, App was granted the minimum premium rate on his policy. But investigators believe that App employed at least two full-time employees and a number of part-time workers between 2005 and 2009.
As a result of this alleged premium avoidance scheme, App underpaid his workers’ compensation insurer a total of $42,115 in premium payments, stated the AG's office. Additionally, AIM paid more than $700,000 in medical and disability payments to the injured employee.
After a grand jury arraignment, App was arraigned in Middlesex Superior Court last week. He pleaded not guilty and was released on personal recognizance, reported the AG's office.
App is scheduled to appear in Middlesex Superior Court on August 14, for a pretrial conference.