Fresno residents Marcus Asay, 69, and Antonio Gastelum, 53, were sentenced Thursday 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, doing business as American Labor Alliance (ALA).Â
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, Asay, Gastelum, and ALA were convicted of the pension fraud scheme following a five-week jury trial. Asay and ALA were also convicted of committing a worker’s 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, worker’s compensation coverage, and hardship exemption.
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 expenses included restaurants, travel, credit cards, rare coins, transfers to Asay’s personal retirement account, online companion websites, and rent for Asay’s lakefront mansion in Fresno.
Asay, Gastelum, and ALA then covered up the fact that the retirement money was gone by taking money the company received from the worker’s 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 the source of the funds before using them for improper expenses.
For the worker’s 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 important to the customers because they needed to present these items to their own customers and regulators as proof of having worker’s 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 worker’s compensation fraud scheme generated $2.25 million in premiums.
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 both testified in their own defense at trial and were found to have perjured themselves.
