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Okeechobee Contractor Charged with Fraud, Theft

12/9/2005

CONTACT:  Nina Banister
(850) 413-2842
 
OKEECHOBEE—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 today 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.

As a statewide elected officer of the Florida Cabinet, Chief Financial Officer Tom Gallagher oversees the Department of Financial Services, a multi-division state agency responsible for management of state funds and unclaimed property, assisting consumers who request information and help related to financial services, and investigating financial fraud. Gallagher also serves as the State Fire Marshal.