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Father, daughter who ran security company ordered to pay $600k in restitution for insurance fraud, tax evasion

In recent workers' compensation defense news, a company owner based in the San Joaquin Valley and his adult daughter were ordered to pay over $600,000 in restitution to the state of California earlier this week after pleading guilty to a multitude of insurance fraud and tax evasion charges.

Jerry B., 69, was the proprietor and president of Safehome Inc., a security company located in Kern County, California, and his daughter, Cynthia R., 47, was its chief financial officer.

According to the Kern County District Attorney's Office, the two engaged in a systematic pattern of fraudulent activity dating back to 2007, when state officials first became aware of a potential problem.

Specifically, prosecutors alleged that Safehome Inc. failed to pay work comp premiums, a practice that resulted in the illegal withholding of over $400,000. Furthermore, they accused the company of operating out of its classification as an alarm company by employing several workers as roofers and failing to report this to the proper state officials.

This rather sizeable sum of money would have otherwise been paid to the California State Compensation Insurance Fund and the Employment Development Department.

When the fraud was eventually uncovered, both Jerry B. and Cynthia R. were charged with a litany of felonies and faced several years in prison.

However, the two ultimately pleaded guilty to one count each of workers' compensation fraud and eight counts each of tax evasion. They were subsequently ordered to pay $475,100 in restitution to the SCIF and $127,899 in restitution to the EDD, and were each given 10 years probation. Cynthia R. was also ordered to perform 400 hours of community service.

If you are an uninsured California employer facing a real problem -- prospective fine, prosecution, an employee injury or litigation -- there may be 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.

Stay tuned for further developments in the area of workers' compensation defense law ...

Source:

Claims Journal, "California father daughter team must repay $600k in workers' comp fraud," Oct. 10, 2012

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