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Construction Fraud Leads to Guilty Plea in California

Construction fraud strikes again, this time in California, where two siblings admitted to fraud and embezzlement against the California State Compensation Insurance Fund between January 2012 and March 2017, with a loss of more than $500,000. According to Construction Dive, the owner and office manager—brother and sister, respectively—at Ultimate, Inc., allegedly altered the company's payroll to "avoid paying the proper amount of workers' compensation insurance premium."

Among other things, authorities also said the siblings allegedly avoided filing workers' compensation claims and cut wages on a student housing project at a local university. On April 24, the siblings entered a plea deal with the Los Angeles County District Attorney's Office. Construction Drive states Enrique Vera pleaded guilty to one felony count of workers' compensation fraud and pleaded no contest to one felony count of grand theft of labor. Meanwhile, Gloria Vera pleaded no contest to one felony count of insurance fraud.

"The high cost of workers' compensation is one of the reasons construction companies opt to get workers through employee leasing companies, also known as professional employer organizations," Construction Drive reports. "By transferring their employees to the leasing companies' payroll, the contractor can take advantage of the company's experience rating and buying power, which often translates to more affordable workers' compensation costs."

—Andrew Michaels, editorial associate

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Monday, 15 August 2022