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California business owner accused of workers' compensation fraud

A business owner accused of intentionally misrepresenting his payroll has been found guilty and sentenced by a state court. The owner of a California-based cleaning company has been sentenced to five years in prison or ten years' probation and a requirement to pay hefty fines. He was found guilty on a number of charges related to workers' compensation fraud.

In California, the law requires business owners to maintain insurance for all employees under the workers' compensation model. However, in order for this insurance to take effect, the insurance company must have accurate information pertaining to the number of employees as well as payroll and loss history. If an employer misrepresents these numbers, they may be able to purchase insurance at a lower rate for their workers, or avoid purchasing at all. The result is an unbalanced playing field in the free market in which honest companies are forced to compete with companies operating with illicit lowered overhead.

Court records indicate the owner of Awesome Products underreported to the tune of $8 million in payroll, causing a premium loss for the insurance company in question of almost a million dollars. The investigation was launched after one of the company's workers filed an insurance claim for an injury, casting light on the entire operation. Local watchdog committees collaborated with law enforcement to convict the owner of the company.

Workers' compensation fraud is an extremely serious charge for any business owner to face, both here in California and elsewhere in the country. It is very important, should a business owner face such charges, that his or her defense is meticulous in ensuring the rights of the defendant are respected throughout the investigation process. Whether a business owner is facing an administrative investigation on the state level or formal criminal charges, the playing field must be equal in order to ensure fair and impartial proceedings geared toward achieving the best possible results.

Source: Source: Orange County Breeze, "Buena Park company owner convicted of underreporting payroll to State Compensation Insurance Fund," Aug. 8, 2013

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