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Scranton Couple Accused of Shakedown Scheme

A couple from Scranton is in trouble after investigators said a man used his state job to shake down local companies paying worker’s comp insurance.

Investigators said his wife was in on the scheme.

Arrest papers show James McDonnell, acting as regional supervisor of the State Workers’ Insurance Fund, ran a scheme to steal $80,000 from companies in Scranton, Hazleton and Lehighton.

Court papers show McDonnell of Scranton asked companies for bribes in exchange for lower worker’s comp insurance rates from the state.

Those same papers show some of those companies paid for the kickbacks, by putting McDonnell’s wife, Michelle, on their payrolls for jobs she never did.

According to the State Attorney General`s office, the companies in Scranton, Hazleton and Lehighton claim they were victims of the McDonnells’ activities over the past 10 years.

When Newswatch 16 tried to talk with the couple at their home in Scranton, their neighbors in on the other side of the duplex claimed the McDonnells are no criminals.

“I don`t even know what the charges are,” said the woman who lives next door.

Arrest papers claim the most recent case involving the McDonnells began in December, 2010. The owner of Stone Office Furniture on Pear Street in Scranton felt a proposed $50,000 hike in worker’s comp insurance was too steep.

According to those arrest papers, the company’s owner wanted to appeal the increase. Papers said James McDonnell said that could only happen if it had his support. It was then, the papers said, that business owner Thomas Stone knew he was being shaken down.

Arrest papers show Stone Office Furniture never paid the bribe, and testimony from Thomas Stone helped bring criminal charges against the McDonnells.

As for his job in the Scranton office at the State Workers Insurance Fund, the Pennsylvania Department of Labor and Industry has suspended James McDonnell without pay or benefits.

If convicted, the couple faces serious prison time. Michelle McDonnell’s maximum sentence could be 40 years and $50,000 in fines.

James McDonnell is looking at 136 years in prison, and more than $200,000 in fines.


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