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Oct. 31, 2007

Vancouver brothers charged with 31 felony counts each for L&I fraud

TUMWATER  — Jerry and James Schram, brothers and owners of a Vancouver excavation business, pleaded not guilty today in Clark County Superior Court to 31 felony counts each for violating state labor laws. Trial is scheduled for January 23, 2008.

Among the charges, the Schrams are accused of defrauding the state Department of Labor & Industries (L&I) by not accurately reporting their employees’ hours worked and risk classifications — information used to determine premiums for workers’ compensation insurance. They are also accused of not paying overtime properly when employees worked more than 40 hours a week.

L&I has assessed a $650,000 fine against Schram Excavating LLC for deliberate misrepresentation — five times the estimated unpaid premiums of $129,000. This penalty was assessed because Schram Excavating did not change its reporting practices following a 2003 audit that found the company was not reporting all of its hourly workers and not reporting the correct risk classifications.

“We consider the Schrams to be repeat offenders who have tried to cheat the state’s workers’ compensation program and to create an unfair business advantage in their industry in Southwest Washington,” said Carl Hammersburg, manager of L&I’s Fraud Prevention and Compliance Program. Underreporting or failing to report worker hours enables dishonest contractors to underbid their honest competitors.

"Contractors who pay their fair share shouldn’t be at a financial disadvantage," said Hammersburg.

The Washington State Attorney General's Office filed the charges Sept. 14, with the assistance of the Clark County Prosecutor's Office. Susan DanPullo, Assistant Attorney General, will try the case. Each brother has been charged with 24 counts of first-degree theft and seven counts of false reporting. In addition, James Schram has been charged with one count of tampering with a witness.

L&I’s fraud web site, www.Fraud.LNI.wa.gov, includes an online form for reporting fraud. Anyone who suspects fraud may also call L&I’s fraud hotline at 1-888-811-5974.


For media information: Barbara A. Davis, L&I Public Affairs, at 360-902-4216.

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