SACRAMENTO - Fresno residents Marcus Asay, 69, and Antonio Gastelum, 53, were sentenced today by U.S. District Judge Dale A. Drozd to five years in prison and two years in prison, respectively, for committing a long-running pension fraud scheme through their company, Agricultural Contracting Services Association dba American Labor Alliance (ALA), Acting U.S. Attorney Michele Beckwith announced.
ALA also received a corporate fine of $2.5 million. Asay and ALA were each ordered to pay $69,250 in restitution.
On June 18, 2024, following a five-week jury trial, Asay, Gastelum, and ALA were convicted of the pension fraud scheme. They were also convicted of committing a workers’ compensation fraud scheme, a hardship exemption fraud scheme, and money laundering. The hardship exemption fraud scheme involved a supposed exemption from the Affordable Care Act’s requirement that people obtain health insurance or pay a significant shared responsibility payment when they file their taxes.
According to court documents and evidence presented at trial, Asay was the founder and chairman of ALA, and Gastelum was the company’s Chief Operating Officer, Chief Financial Officer, and Compliance Officer. From 2011 through 2019, the defendants offered three sham products: retirement plan, workers’ compensation coverage, and hardship exemption.
Pension Fraud Scheme
For the pension fraud scheme, Asay, Gastelum, and ALA falsely represented to more than 3,000 people that they would protect and invest their retirement money through a 401(k) Plan when, in fact, they used the money for improper business and personal expenses. The improper expenditures included restaurants, travel, credit cards, rare coins, transfers to Asay’s retirement account, online companion websites, and rent for Asay’s lakefront mansion in Fresno. Asay, Gastelum, and ALA then covered up that the retirement money was gone by taking the company's money from the workers’ compensation fraud scheme and holding those funds out as pension funds. The loss caused by the pension fraud scheme was more than $620,000.
Asay’s money laundering conviction resulted from this scheme because he moved pension funds through multiple bank accounts to conceal their source before using them for improper expenses.
Workers’ Compensation Fraud Scheme
For the workers’ compensation fraud scheme, Asay and ALA falsely represented that national insurers backed the company’s compensation coverage in several states, including California. Asay and ALA did so by listing the national insurers on the certificates of insurance and policy declarations that the company issued to customers. The accuracy of the certificates of insurance and policy declarations was essential to the customers because they needed to present these items to their customers and regulators as proof of having workers’ compensation coverage to continue doing business. When government authorities began investigating the workers’ compensation fraud scheme, Asay and ALA sent letters to customers telling them not to cooperate. The workers’ compensation fraud scheme generated $2.25 million in premiums.
Hardship Exemption Fraud Scheme
For the hardship exemption fraud scheme, Asay and ALA falsely represented that, for a few hundred dollars, they could provide people with an exemption that would protect them from the Affordable Care Act’s shared responsibility payment for not having health insurance when, in fact, only government agencies could issue such exemptions. Moreover, the exemptions were free to those who qualified.
Asay and Gastelum received enhanced sentences because they testified in their defense at trial and were found to have perjured themselves.
