A former El Dorado Hills businessman was sentenced to prison Friday for looting millions of dollars from a workers’ compensation company he was running for a California Indian tribe.
Gregory J. Chmielewski, 46, was sentenced to three years and five months in prison by U.S. District Judge Garland Burrell Jr. in Sacramento.
Prosecutors said Chmielewski, who now lives in West Bend, Wis., diverted $7.3 million from Independent Management Resources, a company he was managing on behalf of the Fort Independence Community of Paiute Indians in Inyo County. The company collapsed in 2007, leaving 117 injured workers across the state owed $1.8 million in unpaid workers’ comp claims.
The management firm was founded in Healdsburg and later moved to Roseville. It was one of several companies that sprang up in California in the early 2000s offering deeply discounted workers’ comp insurance to employers desperate for relief when workers’ comp costs were soaring.
Such companies became controversial. California’s insurance regulators said the discount programs were illegal and didn’t provide workers with adequate legal protections because disputed claims were handled through tribal adjudication systems.
After then-Gov. Arnold Schwarzenegger signed into law a reform package that stabilized insurance premiums, the companies went by the wayside.
“Many of the victims harmed in this scheme were companies in California’s construction industry, where employees worked as roofers, general laborers and other jobs where injuries can occur. The defendant’s actions left many injured workers without the benefits they expected and deserved,” said acting U.S. Attorney Phillip Talbert in a prepared statement.
Chmielewski pleaded guilty to two counts of fraud in January.