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Fullerton man facing multiple felony charges for work comp fraud

Under California law, there can be no uninsured employers, meaning all employers are legally obligated to provide their employees with workers' compensation insurance coverage. In addition, employers must submit payroll records - including both an accurate number of employees and their respective incomes - to both their workers' compensation insurance company and the Employment Development Department (EDD).

The reason why they must submit this information is that the EDD is responsible for collecting payroll taxes, while work comp insurers use these numbers in conjunction with other variables (i.e., number of workplace accidents) to calculate premium rates.

Failure to provide work comp insurance or accurately report any of the aforementioned payroll information can lead to criminal prosecution and potentially crippling employee lawsuits in the event of work-related injuries.

Interestingly, a 42-year old Fullerton man, Jose G., is now facing multiple felony charges after the Orange County District Attorney's Office claims he intentionally underreported over $2 million in payroll information to the State Compensation Insurance Fund for four years in an attempt to avoid paying higher work comp premiums.

Prosecutors are alleging that not only did Jose G. fail to provide his employees with the requisite work comp coverage and collect on insurance claims for which he did not pay the proper premiums, but that he also avoided paying a significant amount of state taxes.

Jose G., who owned and operated Jose Martinez Tree Service, Inc., has been charged with the following:

  • 20 felony counts of failing to file a return with the intent to evade taxes
  • 20 felony counts of willfully failing to pay taxes
  • 6 felony counts of misrepresenting facts to the State Compensation Insurance Fund
  • 2 felony counts of making fraudulent statements

Due to sentencing enhancements, a conviction for Jose G. could result in anywhere from 31 years in prison to probation.

It is worth noting that law enforcement officials originally began investigating Jose G. back in 2007 after he filed a work comp claim with the state seeking to collect benefits for the family of one of his employee's who died after falling into an industrial wood chipper.

If you are an uninsured California employer facing a real problem - prospective fine, prosecution, an employee injury or litigation - there are steps that can be taken to minimize the consequences. In these difficult circumstances, you may want to consider consulting with an experienced legal professional.

This post was provided for informational purposes only and is not to be construed as legal advice. Names have been withheld to protect the identity of the parties.

Source:

Orange County Weekly, "Man accused of workers comp fraud; case began with employee dying in wood chipper" Oct. 11, 2011

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