CFO Tom Gallagher surrounded by children
Volume 2 Number 50
December 12, 2005

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OKEECHOBEE CONTRACTOR CHARGED WITH FRAUD, THEFT

A contractor is facing grand theft and workers’ compensation fraud charges for using loan money for personal use instead of completing construction on a couple’s Okeechobee County home, and for failing to carry proper workers’ compensation coverage.

Merle Dee Johnston, 69, of Okeechobee, was arrested on the charges following an investigation by detectives with the Florida Department of Financial Services, Division of Insurance Fraud.  Johnston allegedly admitted to using some $23,000 of the couple’s construction loan money for personal use. 

“This couple was left in a financial lurch and workers were put at risk of being injured,” said Tom Gallagher, Florida’s chief financial officer who oversees the Department of Financial Services.  “We will continue to aggressively pursue anyone who disregards the law and the safety and welfare of others.”

Johnston initially received some $60,000 from a construction loan the couple had taken out to begin the work.   During the next six months, detectives said, only the foundation, blocks and trusses were installed.  Johnston never returned to complete the work and the structure collapsed. 

The investigation also revealed that Johnston had not paid several outstanding bills. It was also determined that he had underreported his income to Labor Finders and ultimately was working without proper workers’ compensation coverage.  Johnston allegedly billed the couple for approximately $19,000 in labor and supervision cost while reporting only $2,300 worth of labor costs to Labor Finders.  In fact, fraud detectives found that Johnston reported only $2,300 in payroll for the entire year, although he was working other jobs. 

The Department of Financial Services, Division of Insurance Fraud, investigates fraud in all types of insurance, including health, life, auto, property and workers’ compensation.  To report information about this case or any other possible insurance fraud case, call the department’s fraud hotline at 1-800-378-0445.  A reward of up to $25,000 may be offered for information leading to an arrest and conviction.


ARREST OF TAMPA COUPLE FOR STEALING UNCLAIMED PROPERTY

Tom Gallagher, Florida’s chief financial officer, announced the arrest of a husband and wife who conspired to illegally collect more than $11,000 in unclaimed property.   Investigators with the Department of Financial Services’ Office of Fiscal Integrity said that the couple got caught when the man’s brother, and rightful owner of the unclaimed property, contacted the department to collect the money.

“Stealing money for personal gain is unconscionable and warrants swift and severe action by state prosecutors,” said Gallagher, who oversees the Department of Financial Services.

Stephen Gutstein, 65, was arrested and booked into the Hillsborough County Jail on charges of grand theft, forgery and uttering a forged instrument.  His wife, Lynne Gutstein, 59, was also arrested and charged with grand theft.   If convicted, each felony count carries a sentence up to 5 years in prison plus a $5,000 fine. 

According to state investigators, Stephen and Donald Gutstein are brothers who were entitled to nearly $23,000 in proceeds from their deceased parents’ estate.  Stephen Gutstein immediately collected his half of the money, or $11, 231.15.   Stephen Gutstein, with help from his wife Lynne, created a false document containing his brother’s forged signature on the unclaimed property affidavit to illegally collect his brother’s half of the funds.

The department’s Bureau of Unclaimed Property learned that the money had been fraudulently obtained when Donald Gutstein filed to collect his rightful portion of the proceeds.  Donald Gutstein did not immediately pursue the funds because of health problems.

Floridians should report fraud or abuse involving state funds to the Department of Financial Services by calling 1-800-GET-LEAN (1-800-438-5326).