Painting Company that Defrauded Workers' Comp System Must Pay $212,000

The owner of a Spokane residential painting company will pay $212,000 in back premiums and penalties in a case involving false reporting and cash payment of wages to avoid workers' compensation premiums.

Dale G. Koohns of Koohns Painting pleaded guilty in Spokane District Court to two counts of third-degree theft. Koohns will serve 30 days on electronic home monitoring. The guilty pleas were part of a settlement that includes an immediate payment of $55,000 to the Department of Labor & Industries (L&I) and monthly payments of $700 with the balance to be paid in full within 5 years.

"We received valuable help on this case from honest contractors who got tired of being underbid," said Carl Hammersburg, manager of L&I's Fraud Prevention and Compliance Program. "This settlement helps level the playing field for them."

To guarantee repayment of the debt, Koohns agreed to liens on personal assets. If the balance of $212,000 is not paid in full within 5 years, penalties will double and interest will accrue until paid in full.

In return for the guilty pleas and financial settlement, the Attorney General's Office agreed to drop six felony counts. The class C felonies were for intentional false reporting during six quarters in 2005–2006. Each count was punishable by up to 5 years in prison.

The case against the Dale Koohns is part of L&I's efforts to find unregistered contractors and registered construction companies that purposefully underpay their insurance premiums. The state's underground economy task force estimates that in 2006, participants in the underground construction economy cost Washington state $113 million in unpaid taxes and premiums.

Susan DanPullo of the Attorney General's Office represented L&I in the Koohns settlement. DanPullo was hired in 2006 through new funding from L&I to increase criminal fraud prosecutions.

To verify that building trades contractors are registered and in good standing with L&I, go to . If you suspect fraud, fill out an online form or call the fraud hotline at 888-811-5974.

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