Temp agency owner gets jail time for workers' comp, tax schemes

A former temporary employment agency owner was sentenced to a year and one day in jail and three years supervised release, has to pay $3.9 million to the IRS and owes Traveler’s Insurance Co. $155,870 in restitution for a range of tax and insurance fraud offenses, according to the U.S. Attorney’s Office, District of Massachusetts.

Dam Ngoc Luong, the 70-year-old woman who operated Four Seasons Temp, Inc. from at least 2015-2019, pleaded guilty to two counts of filing false corporate and individual tax returns, three counts of failure to collect and pay over employee taxes and one count of mail fraud.

According to the U.S. Attorney’s Office, Luong defrauded Travelers by concealing employee wages through cash payments, resulting in a lower workers’ comp premium. Through the scheme, Luong shorted the carrier some $155,000 in premiums.

The cash payments to employees amounted to more than $12 million, according to the U.S. Attorney’s Office, which noted Luong failed to pay more than $3 million in employment taxes.

While operating the business, Luong would also collect payments from clients, and then cash the checks rather than deposit the funds into the business’ account. When filing her corporate tax returns, she would only report the money that was deposited into the account, according to the U.S. Attorney’s Office, which reported Luong failed to pay federal taxes on more than $14 million in business income.

Further, Four Seasons Temp was set up as an S-corp., with net business income and expenses flowing through Luong’s individual tax returns. Due to this arrangement, Luong didn’t report more than $3 million in pass-through income and failed to pay $885,000 owed in personal income taxes.

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