Lying on the Job

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36779193 - business executive in formal suit giving money as a bribe

Properly reporting how many people your company employs and how much money you paid them is a critical component of legally operating a business in the United States. If your business involves manual labor, these figures are important not only for assessing your tax burden, but also for determining how much your company should contribute to your state’s workers’ compensation insurance fund. However, The Californian, tells the story of a business owner who under-reported his employees’ wages, and in the process, defrauded the California Workers’ Compensation Insurance Fund.

The story states that the fraudster operated a landscaping business in the Marina, California. He paid millions in unreported wages to his employees. During a worksite inspection investigators discovered he had contracts with multiple government agencies, but had failed to report any wages to the state Workers’ Compensation Insurance Fund. (Clearly this fraudster didn’t just trim his county government’s trees and bushes, he also cut corners on his businesses’ taxes.)

He was sentenced for two felony counts of inaccurately reporting employee wages in order to obtain a lower workers’ compensation insurance premium and one misdemeanor charge of willfully failing to file payroll tax returns with intent to evade tax. (Workers’ compensation programs exist to protect workers. By failing to properly contribute to state programs, this fraudster has put himself in danger.)

His sentence requires that he spend 150 days in county jail, including an extra 30 days for violating a previous probation. After serving his time, he will be on probation for five years. Additionally, he was sentenced to pay more than $10,000 in fines and to repay the California Workers’ Compensation Insurance Fund $2,974.76.

This fraudster thought he could game the system by simply failing to pay what he owed. Hopefully his sentence serves as a reminder to others that the best way to reduce the tax burdens on a business is not to ignore them.

Source: Today’s ”Fraud of the Day” is based on an article titled, ”Marina man sentenced for workers comp fraud,” written by Chelcey Adami and published by The Californian on October 15, 2015.

A Marina man was sentenced to five years of probation and three months in county jail for workers’ compensation insurance fraud and tax evasion, the Monterey County District Attorney’s Office announced Thursday.

Felipe DeJesus Olvera, 45, of Marina, was sentenced by Judge Julie R. Culver on two felony counts of inaccurately reporting employee wages in order to obtain a lower workers’ compensation insurance premium, and one misdemeanor charge of willfully failing to file payroll tax returns with intent to evade tax.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.