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Owner of California pest control company facing work comp fraud charges

In recent uninsured employer news, the owner of a prominent San Mateo-based company was arrested by law enforcement officials earlier this week on a multitude of workers' compensation insurance premium fraud charges.

Teresa Reif, 31, is the proprietor of Genesis Building Services Inc. (Genesis), a prominent Bay Area janitorial and pest control company.

According to the officials with the California Department of Insurance (CDI), Reif engaged in a systematic pattern of fraudulent activity concerning the purchase of work comp insurance for her company from March 2005 to March 2008.

Specifically, officials allege that during the aforementioned timeframe, Reif purchased work comp insurance from both the State Compensation Insurance Fund (SCIF) and Redwood Fire & Casualty Insurance (Redwood). However, in 2008, Redwood became suspicious that Genesis was not properly reporting its payroll and referred the matter to the CDI for further investigation.

The CDI's Fraud Division subsequently conducted an in-depth investigation and discovered that Redwood's suspicions were well-founded.

Investigators determined that Genesis had consistently misrepresented the number of employees and the size of its payroll when applying for work comp insurance, while insured and during annual audits conducted by both Redwood and SCIF.

Breaking the total numbers down, CDI's investigators determined that Genesis (acting through Reif):

  • Underreported $10,567,776.69 in payroll
  • Failed to pay $2,957,089.20 in work comp premiums

"Business owners should be on notice, egregiously under-reporting wages to avoid premium payments will not go unpunished," said Insurance Commissioner Dave Jones. "These violations will be fully investigated by my Department."

If convicted, Reif faces up to 5 years in prison and/or a fine of up to $50,000.

If you are an uninsured 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.

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

Related Resources:

California business owner arrested for insurance fraud (Claims Journal)

Bug killer zapped for insurance fraud (Insurance Networking News) 

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