Contractor failed to pay for workers’ compensation

Former painting contractor Dale Koohns pleaded guilty Monday to two misdemeanor counts of third-degree theft for failing to pay $132,418 in workers’ compensation premiums.

Koohns, 61, may have run as many as 10 painting crews at a time, according to court documents. He paid workers in cash while claiming not to have any employees in reports to the Washington Department of Labor and Industries.

Koohns had been charged with six felony counts of intentional false reporting during 2005 and 2006, but the charges were reduced in return for his agreement to pay $212,000 in penalties and back premiums.

District Court Judge Vance Peterson accepted Koohns’ plea and imposed probation and 30 days of electronic home monitoring.

His attorney, John Clark, said Koohns had considered his employees independent contractors responsible for filing their own reports with L&I.

But Assistant Attorney General Susan DanPullo noted Koohns, who had been audited four times before the investigation that led to the felony charges, was made fully aware workers were not contractors.

Koohns had paid an $829 assessment for back premiums after a 1995 audit, court documents say. That, the closure and reopening of his industrial insurance account and his responses involving five injury claims indicated he was familiar with reporting requirements.

He and his son also own a sandwich shop that has complied with industrial reporting requirements.

Safety and compliance inspections in 2006 triggered an audit that included interviews with former employees and a competitor who said substantial underbidding by Koohns could only be possible by his failure to pay federal and state taxes.

Also, Koohns’ company, Dale Koohns Painting, bought almost $400,000 in supplies for the years 2004, 2005 and 2006. Those purchases were often made by employees.

Koohns reported only $163,144 in gross income for those three years.

When interviewed in 2007, Koohns acknowledged his failure to report worker hours to the department.

In court, Koohns said little after entering his plea and declined comment afterward.

Koohns, who taught in several District 81 elementary and middle schools before retiring in 1999, must make a $55,000 initial payment and $700 monthly payments, with the balance due in full within five years. Liens will be placed on his assets, which include a $330,000 Spokane home, a $774,780 lake home in Kootenai County, a $47,500 Porsche and $41,100 BMW.

Carl Hammersburg, manager of the L&I fraud and compliance program, said the deal with Koohns was among the largest of 12 criminal cases resolved by the department, with other cases pending. Construction industry underpayment of insurance premiums cost the state an estimated $113 million in 2006, he said.

The department, which reviews 5,000 companies annually, brings criminal charges when civil charges do not change behavior.