Major Workers’ Compensation Insurance Fraud Uncovered in California

In Kings County, California, a significant workers’ compensation insurance fraud scheme amounting to nearly $30 million has been uncovered by a task force investigation led by the California Department of Insurance. Two farm labor contractors, aged 49 and 29, have been arraigned on multiple felony charges, including insurance fraud, grand theft, and tax fraud. The investigation revealed that the contractors had underreported over $29.2 million in payroll across multiple businesses to avoid paying higher insurance premiums and taxes.

The two individuals operated Vista Pacific Labor Solutions, Inc., and Calzona Ag Management, Inc., where they allegedly shifted payroll between the companies to circumvent increased insurance assessments. The underreporting resulted in a combined premium loss of $3.5 million. Additionally, the scheme defrauded the Employment Development Department and the Franchise Tax Board of approximately $3 million in unpaid taxes, penalties, and interest.

The investigation also uncovered that one of the individuals fraudulently obtained a COVID-19 Paycheck Protection Program loan, for which he pleaded guilty and was sentenced to one year in prison. The case is being prosecuted by Kings County District Attorney Sarah Hacker.

Insurance Commissioner Ricardo Lara emphasized the importance of exposing such fraud to protect legitimate businesses and consumers from higher insurance premiums. The Central Valley Workers’ Compensation Fraud Task Force, comprising multiple county and state agencies, played a crucial role in bringing these fraudulent activities to light.