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Yet another California father, daughter duo facing criminal charges for work comp fraud, tax evasion

Earlier this fall, our workers' compensation defense blog discussed a shocking story in which a business owner based in the San Joaquin Valley and his daughter were ordered to pay over $600,000 in restitution to the state of California after pleading guilty to a multitude of insurance fraud and tax evasion charges.

While you would naturally be inclined to think that this was a one of a kind story, guess again.

According to reports, Antonio A., 47, and his daughter Nayeli T., 22, were the owners and operators of Torres Services and Torres Cleaning, two companies that contacted with the popular Southern California supermarket chain Cardenas Markets.

According to the Riverside County District Attorney's Office, the father-daughter duo engaged in a systematic pattern of fraudulent activity between 2009 and 2012 in an attempt to avoid paying higher work comp premiums.

Specifically, prosecutors allege that both Torres Services and Torres Cleaning failed to pay work comp premiums, a practice that resulted in the illegal withholding of $1.7 million. Furthermore, they have accused the company of paying employees only in cash, misclassifying employee positions and concealing work injuries.

This rather sizeable sum of money would have otherwise been paid to the California Employment Development Department, as well as First Comp Insurance, Chartis Insurance and National Fire Insurance.

When the fraud was eventually uncovered by investigators with the DA's office and the California Department of Insurance, both Antonio A. and Nayeli T. were charged with five felonies each, including four counts of misrepresentation to obtain workers' compensation and one count of tax evasion.

"These types of fraudulent activities inappropriately raise the price of goods for the consumer, as well as increase insurance rates and taxes for all of us," said Riverside County District Attorney Paul Zellerbach.

Just last week, the two pleaded not guilty to the charges at their arraignment. Antonio A. is currently being held in lieu of a $1.7 million bail, while Nayeli T. is free on a $25,000 bond. If convicted, the two could face up to 16 years each in prison.

A hearing is scheduled for early next month. It is worth noting that Cardenas Markets has not been accused of any criminal activity.

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 ...

Sources:

Southwest Riverside News Network, "Father, daughter plead not guilty to workers' comp fraud," March 15, 2013

The Press Enterprise, "Not-guilty plea for father, daughter in insurance fraud scheme," Richard De Atley, March 14, 2013

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