Maxwell Wood, United States Attorney for the Middle District of Georgia, announced today that Kerry Clabaugh was sentenced on March 27 to a term of 36 months in prison by the Honorable W. Louis Sands, Judge of the United States District Court for the Middle District of Georgia.  Clabaugh, age 47, of Dothan, Alabama, and formerly of Albany, Georgia, had previously pled guilty to the offense of conspiracy to commit wire fraud in violation of Title 18, United States Code, Sections 1343 and 1349.  Clabaugh was ordered to serve 2 years on supervised release following his prison term, and to pay a total of $1,026,690 in restitution to four insurance companies.

Clabaugh’s plea agreement reveals that he previously owned “On Demand Temporaries,” an Albany temporary employment agency.  When his company’s workers’ compensation coverage was cancelled for nonpayment of premiums which Clabaugh disputed were due, Clabaugh changed the name of his business and reapplied for insurance coverage in the new company name.  The “new” corporate entity was simply a continuation of the same temporary employment agency owned and operated by Clabaugh.  On the insurance application, however, Clabaugh represented that the business was new and was owned and controlled by other persons.  He also failed to disclose the name change and the unpaid premium owed by the predecessor company.  The false application enabled Clabaugh to secure insurance coverage for his company that would have otherwise been denied. Clabaugh changed the name of his business in this manner four times, each time submitting false applications in order to secure workers compensation insurance coverage.

Mr. Wood remarked, “ insurance fraud is not a victimless crime.  The real victims of insurance fraud are the honest business owners who pay higher premiums as a result of fraudulent schemes such as the one perpetrated by Mr. Clabaugh.”

The case was investigated by the Georgia State Board of Workers’ Compensation and the Federal Bureau of Investigation, and prosecuted by Assistant United States Attorney K. Alan Dasher.  Inquiries regarding the case should be directed to Sue McKinney, Public Affairs Specialist, United States Attorney’s Office at (478) 621-2602.