Temporary Fraud Creates a Lasting Impression

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When interviewing for a job, it’s important to make a good impression. While the CEO of a Modesto, California employment firm might have impressed many of her clients by helping them find employment, she didn’t do such a great job of impressing the State Compensation Insurance Fund, which is the largest provider of workers’ compensation insurance in California. Today’s fraudster did provide adequate workers’ compensation coverage for her employees, but she committed workers’ compensation fraud by lying about the number of employees so she could receive a cheaper insurance rate.

The State Compensation Insurance Fund of California exists to make sure the state’s workplaces are safe and that injured workers receive proper health care in the case of an on-the-job injury. Many business owners perceive workers’ compensation insurance as costly, but the policy can actually help businesses save money. (If a company neglects to provide insurance coverage, an injured worker could sue the business, costing it more than if a workers’ compensation policy had been purchased in the first place. Even worse, the injured worker could be out of a job and disabled.)

It seems that the CEO of the temp company cared about her employees because she carried a workers’ compensation policy for about two-and-a-half years. (But maybe she just wanted to cover her behind and throw the organization off her trail.) She ultimately scammed the State Compensation Insurance Fund out of $525,000 of insurance premiums by not paying the appropriate premium for the coverage.

California employers are required by law to carry workers’ compensation insurance and to submit their payroll records to the State Fund. (Employers must provide the number of employees and their income.) The Denair, Calif., woman underreported $2.8 million in payroll. (Eventually a State Fund audit of her policy found the discrepancy.)

The 31-year-old former CEO pleaded no contest to one count of workers’ compensation fraud for obtaining insurance at a reduced rate. Because of her fraudulent actions, she was sentenced to serve 120 hours of community service and three years of probation. On top of that, she must also pay more than $525,000 in restitution to the State Compensation Insurance Fund. (As she should.) It looks like her temporary illegal actions have left a lasting impression of fraud. (She now has a criminal record for life.)

Today’s “Fraud of the Day” is based on an article entitled, “Head of Modesto employment firm convicted of workers’ compensation fraud,” published by The Modesto Bee on March 12, 2018.

A 31-year-old Denair woman has been convicted of workers’ compensation fraud, under-reporting $2.8 million in payroll and costing the state about $525,000 in insurance premiums.

Aileen Ramirez on Feb. 27 pleaded no contest to one count of fraud to obtain insurance at a reduced rate, the Stanislaus County District Attorney’s Office announced in a news release Thursday. Two other counts of insurance fraud were dropped.

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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.