Up to No Good

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There are a number of things that brothers and sisters fight about such as tattling, chores, the remote control and who gets the bathroom first in the morning. A brother and a sister from Paramount, California were up to no good when they put aside their sibling rivalries to run a $6.3 million workers’ compensation fraud scheme together. (Money trumped bickering in this familial pair.)

The deceptive duo carried out their workers’ compensation fraud scam in two ways. They altered payroll records to skimp on the amount paid for the company’s compensation insurance premiums. (The smaller the workforce, the cheaper the insurance policy.) This payroll manipulation caused a $500,000 loss to the California State Compensation Insurance Fund (SCIF). The second way the scam was carried out involved the sister, who was also the office manager. She concealed employees’ injuries so they could not receive workers’ compensation. (That’s just evil.)

Today’s fraud article explains that the construction company was run by the brother. (Let’s just say that he will not be winning the “Employer of the Year” award due to his unethical business practices.) For more than five years, he not only authorized the alteration of the payroll records, but also underpaid his employees while working on a student housing renovation at the University of California, Los Angeles. (What a cheapskate.)

The 49-year-old owner of the construction company and his 58-year-old sister both pleaded guilty to workers’ compensation fraud. In a plea deal, the siblings agreed to pay back the $6.3 million they stole from SCIF plus $30,000 in fines and $5,000 for investigation costs. (The plea deal was a good idea as the brother was facing up to 15 years in state prison and the sister could have received up to 19 years in state prison.)

Instead of a prison sentence, the two family members will wear electronic monitors for a year and be required to perform 500 hours of community service. (You can be sure that the SCIF will also be watching the construction company’s business dealings pretty closely in the future as well.) If all goes well, the brother and sister will have their convictions become misdemeanors and they will be placed on 18 months of summary probation. (If these two siblings are smart, they’ll work together for the good of their employees, ensuring that they are protected if injured while on-the-job.)

Today’s “Fraud of the Day” is based on an article, Owners of Californian construction firm plead guilty to $6M fraud,” published by Global Construction Review on April 29, 2019.  

Enrique and Gloria Vera’s Ultimate Inc acquired the money by altering payroll records to reduce the amount paid to its employees’ compensation insurance, resulting in a $500,000 loss to California’s State Compensation Insurance Fund (SCIF).

According to Los Angeles County District Attorney’s Office, Enrique Vera, the owner of Ultimate, pleaded no contest to one felony count of workers’ compensation fraud and grand theft of labour. It was found he underpaid employees while working as a contractor on a student housing renovation project at the University of California, Los Angeles.

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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.