On November 23, 2020, the former owners of Merit Drywall, LeRoy and Joyce Mehr, were sentenced for a fraud scheme that bilked an insurance company out of more than $300,000 in unpaid workers’ compensation insurance premiums. The Mehrs were fined $30,000 and ordered to pay Federated Insurance $309,000. The couple was also sentenced to 180 days of electric home monitoring and five years of probation, and they must complete 30 days of community service.
The Mehrs built a business model that involved cheating taxpayers and exploiting workers. The Minnesota Department of Commerce’s Fraud Bureau found that the Mehrs and their company, Merit Drywall, fraudulently treated employees as independent contractors, allowing them to save hundreds of thousands of dollars in workers compensation premiums. These practices, in turn, put Merit in a position to underbid honest contractors.
Unfortunately, Merit Drywall is just the tip of the iceberg: Insurance fraud, misclassification, and wage theft are an increasingly common practices in some sectors of Minnesota's construction industry.
The solution to this industry problem is simple. Developers and general contractors could end these practices today by refusing to accept bids from companies that submit unrealistically low numbers, have a record of compliance problems, or cannot demonstrate that they and all of their subcontractors maintain compliant payrolls and adequate insurance coverage.
We will continue to work with the community and law enforcement to ensure all contractors engaging in illegal practices are held accountable under the law. We cannot allow this kind of exploitation on our watch.
Media Coverage of the Merit Drywall Case: