Apprehended Owners And Employees Using Phony Names And Phony Claims
Monday, May 14, 2012
California Subcontractors Welcome News Of Apprehended Owners And Employees Using Phony Names And Phony Claims
SACRAMENTO, Calif., May 14, 2012 /PRNewswire/ -- Building a facade to avoid tax obligations ultimately caught up with construction businessman, George Osumi II, who was using the names of family and friends to create ownership in companies. Cheating the system by under reporting more than $3.5 million in payroll to a workers' compensation insurance carrier, Osumi generated a loss to the State Compensation Insurance Fund (SCIF) of more than $814,000 in premiums. According to recent media reports, the Orange CountyDistrict Attorney's Office reported Osumi's indictment on numerous felony counts, including "misrepresenting facts to State Compensation Insurance Fund; failing to file a return with intent to evade tax; and willful failure to pay tax, unemployment insurance, and disability insurance deductions."
Within one week of the news of Osumi facing insurance-fraud charges, the California Department of Insurance (CDI) reported the arrest of Bay Area owners of United RMR Enterprises, Inc. and their worker for workers' compensation insurance fraud. Chad Oberquell, an employee of ITR Industries (ITR) falsely claimed he had been injured on the job, but CDI's investigation uncovered that Oberquell was actually injured while working on a weekend job with United RMR Enterprises, a competitor to ITR. Not only did United RMR Enterprises' owners, Sied "Mike Zarrin" Zarrinsaray and Ronak Barazandeh, fail to report Oberquell's injury, they also paid workers in cash without reporting payroll or withholding payroll taxes.
On behalf of honest subcontractors throughout state, the California Professional Association of Specialty Contractors (CALPASC) Executive Director Brad Diede congratulates CDI Commissioner Dave Jones' and the Orange County District Attorney's efforts to catch these deceitful contractors.
"Both of these cases represent examples of contractors cheating the state out of dollars owed, but worse than that, they represent a double hit to honest contractors. When illegitimate owners pay an employee under the table while encouraging him to tap into a legitimate employer's workers' compensation coverage, contractors playing by the rules not only lose jobs to the fraudulent contractors but also lose their good workers' compensation loss ratio and have to pay extra into the workers' compensation system to cover for this sort of fraudulent behavior.
"We appreciate the focus and efforts of Commissioner Jones and the CDI in tracking down corrupt business owners and employees who abuse state laws by attempting to file false workers' compensation claims and game the system.
"We commend the Orange County District Attorney for nabbing this flagrant violator who cheated the system multiple times by operating with five different licenses since 1981, never carrying workers' compensation insurance and using illegitimate contractors to avoid or underreport workers' compensation claims.
"All too often subcontractors who cheat the system are awarded work by builders, general contractors and owners, while honest contractors continue to struggle and go out of business. When this happens, employees' safety goes at risk, the quality of work suffers and legitimate contractors lose much needed work in this poor economy.
"Through our LEVEL Program, we will continue fighting for effective and immediate enforcement to catch bad actors like these who thrive in the underground economy."
SOURCE California Professional Association of Specialty Contractors (CALPASC)