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CALPASC Salutes Local Agency's Persistence To Snag Long-Time Offender

Thursday, September 27, 2012   (0 Comments)
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CALPASC Salutes Local Agency's Persistence To Snag Long-Time Offender

SACRAMENTO, Calif.Sept. 27, 2012 /PRNewswire/ -- California's lawful contractors got an early Christmas present when Riverside County's District Attorney (DA) announced the conviction of 65-year-old Steven Morales earlier this week. Guilty of five felonies, including perjury and workers' compensation and tax fraud, along with white-collar fraud enhancement, Morales was responsible for $3.1 million in losses to the state and others. Morales lost his contractor's license in 1992 but continued to illegally conduct business by setting up his then 25-year-old son, Brian Todd Morales, as the contracting facade. In 2010, after a lengthy investigation by the DA, California Employment Development Department and insurance companies, Brian Todd Morales, who operated three businesses in his name, pled guilty to the workers' compensation and tax fraud. He was sentenced to four years in prison and ordered to pay $3.1 millionin restitution. The investigation revealed the father and son had cheated more than 400 employees out of unemployment insurance benefits from 2005 through 2008 and had not been reporting workers' injuries. They also were underreporting or not reporting the number of workers employed by their various companies.

The California Professional Association of Specialty Contractors (CALPASC) Executive Director Brad Diede stated:

"This conviction is particularly gratifying given the father's lack of integrity and leadership. It's satisfying to know prime contractors can no longer hire him and perpetuate the problem of defrauding the system. Hopefully, legitimate contractors now will receive the bids.

"The collaboration of these agencies and insurers to capture this lawbreaker exemplifies the exact ingredients needed to make a dent in the construction underground economy.

"The level of sophistication of some swindlers is frightening. However, this case sends a loud and clear message that if someone believes himself to be a mastermind and sets up a counterfeit corporation to avoid paying workers' compensation premiums and taxes, law enforcement will spend the extra time and effort to track the truly bad guy down.

"Unscrupulous companies across the nation go to wild extremes to be the lowest bid in construction jobs, as evidenced in the Morales case and the "cheat to compete" schemes in Florida, reported on earlier this year.

"It's invaluable when agencies like the Riverside County DA, the EDD, insurance carriers special investigative units and authorities from other states like Florida, which recently reported two additional arrests associated with the "cheat to compete" schemes, go the extra mile to catch these crooks.

"The deep-seated deception of those who participate in the underground economy, like Steven Morales, has created significant costs to the state, more than $7 billion in lost tax revenue, and additional costs associated with years of investigation and time in the courts. These costs could be avoided if prime contractors refuse to accept extraordinarily low bids that seem 'too good to be true.'

"Getting this man off the street and sentencing him can't come soon enough. We applaud the DA's tenacity for tracking down this 'behind-the-scenes' player and for ensuring he pays the full amount of losses created by his dishonesty."

 

SOURCE CALPASC


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