The owner of a Des Moines company has been indicted on federal charges of wire fraud
The owner of a Des Moines company hit by employee embezzlement in 2009 has been indicted on federal charges of wire fraud and conspiracy to commit wire fraud, court records show.Dinesh Sethi, owner of DES Staffing, is scheduled to make his initial appearance today in U.S. District Court to hear charges that he and unnamed employees devised and executed a scheme from August 2007 to December 2009 to defraud several insurance companies of workers compensation premiums.
The indictment, which became public Monday, accuses Sethi of defrauding four insurance companies of at least $1 million in workers compensation premiums that should have been paid to cover employees of DES Staffing, a temporary employment agency.If convicted, Sethi faces a penalty of up to 20 years in prison, a $250,000 fine, or both. The indictment also asks that Sethi be required to forfeit all property acquired with the fraudulently obtained funds.
DES Staffing is based in Des Moines and has offices in five states. It provides human resources services including staffing, outsourcing and consulting. In 2009, the company had 40 employees and provided temporary employment for about 1,000. The company's annual revenues are about $20 million.Sethi's indictment follows the sentencing of former DES executive Randy Stringer to 15 months in prison for embezzlement. Stringer pleaded guilty to embezzling about $1 million from a check cashing and quick loan company owned by Sethi.
Stringer pleaded guilty to one count of wire fraud after being charged with 33 counts of wire fraud for allegedly sending $81,475 to Colombia and the Dominican Republic. He had admitted that he embezzled money as finance director for DES Staffing and Des Moines Quick Cash.The sentencing, which took into account that Stringer served a year in jail, also included the unusual step of sealing a memorandum filed by Stringer's lawyer on the grounds that disclosure "of the contents of the defendant's motion would pose a danger to the defendant."
The new indictment charges Sethi created two companies, Staffing Professionals and KDM Staffing, representing that they were separate from DES. Sethi allegedly transferred the majority of his employees to those two companies to avoid rising workers compensation premiums.The indictment says that Sethi used the scheme to reduce premium costs, which had increased in August 2008 "due to serious worker compensation claims, including the deaths of two employees."
In addition, the indictment says Sethi and two employees, one with the initials "R.S.," forwarded false payroll records to an insurance company in 2009. The indictment accuses the two of moving workers from high-premium positions to clerical or lower-premium positions.