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Spokane businesswoman charged with defrauding state in $101,000 disability scam

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July 22, 2014

Spokane – A Spokane woman stands accused of raking in more than $100,000 in disability benefits while working with her husband to operate his motel, and their nightclub and apartment building.

The Washington Attorney General's Office has charged Mistie S. Crosby, 52, with one count of first-degree, felony theft. Crosby is slated to appear on the charge in Spokane County Superior Court on July 23.

The case resulted from a Washington State Department of Labor & Industries (L&I) investigation.

Crosby said she hurt her back, neck and shoulder in September 2010 while working at Sunset Junction, a nightclub in Spokane that has since closed. According to charging papers, she filed an injured workers' claim, physicians confirmed she was injured, and L&I opened her claim.

No mention of ownership

When submitting the claim form, Crosby did not divulge if she was an owner, partner or corporate officer in the business where she was injured. Business owners must provide employees with workers' compensation insurance, but the coverage is optional for the owners themselves. Crosby never signed up for the insurance.

From the time she was injured through early 2013, Crosby received nearly $59,000 in wage-replacement payments and more than $42,000 in medical and vocational benefits from L&I. During that period, she signed official forms certifying she was not working and incapable of working due to her on-the-job injury.

Undercover investigation

However, an L&I investigation revealed that Crosby was working at the Lascelle Motel and an apartment complex while she was receiving the workers' comp benefits, charging papers said. At one point, she even showed apartments to an undercover investigator, and easily climbed stairs as the investigator watched.

In an interview in February 2013, Crosby told the investigator she co-owned the nightclub, motel and apartment complex, and played an integral role in each business, charging papers said.

L&I began the investigation based on a tip that Crosby was more active than she was reporting to L&I, and that she might be helping at the nightclub.

"We investigate every tip," said Doric Olson, deputy assistant director of Fraud Prevention and Labor Standards. "Rooting out fraud allows us to protect the system for workers who are truly injured."

To report cases of suspected fraud, go to Lni.wa.gov/Fraud or call 1-888-811-5974.

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For media information: Debby Abe, L&I Public Affairs, debby.abe@Lni.wa.gov, (360) 902-6043

Connect with L&I: Facebook (facebook.com/laborandindustries) and Twitter (twitter.com/lniwa)

Broadcast version:
A Spokane woman stands accused of raking in more than $100,000 in disability benefits while working with her husband to operate his motel, and their nightclub and apartment building.

The Washington Attorney General's Office has charged Mistie S. Crosby, 52, with first-degree theft of benefits from the Washington State Department of Labor & Industries.

Crosby said she hurt her back, neck and shoulder while working at a Spokane nightclub called Sunset Junction in 2010. She filled out officials forms claiming she was too disabled from the injury to work.

However, an L&I investigation found that Crosby was working at the Lascelle Motel and an apartment complex while receiving workers' comp benefits, charging papers said. She even showed apartments to an undercover investigator, and easily climbed stairs as the investigator watched.

She's scheduled to appear on the charge in Spokane County Superior Court on July 23.

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