The Insurance Brain

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Insurance and Tax Fraud

It doesn’t pay to under report payroll - 02/03/11 DOI Commissioner announced the arrest of business owners and Stockton residents, for "Allegedly" failing to report estimated $15 million in payroll. The Husband & Wife own Cal Poultry Labor, Inc. and California Farm Services, Inc., as well as Bella's Bridal and Shadow Oaks Steakhouse.

The arrest warrants were for 13 Felony counts including insurance premium fraud, filing false reports with the (EDD) and failure to withhold or remit unemployment taxes. If convicted on all charges, each faces a maximum of 22 years in state prison, $910,000 in fines, and restitution. Their bail is set at $1,000,000.00.

Cal Poultry and California Farm were insured with Redwood Insurance Company and SCIF during the years in question.

It is estimated that the total amount of underreported payroll to the insurance companies could exceed $15 million.

Curious...What could be the legal ramifications to the insurance broker/agent who wrote their policies?

Tags: fraud, insurance, tax, workcomp, workerscompensation

Comment by The Big Brain on February 11, 2011 at 8:25pm: You would certainly think the broker had to know what was going on. You know Warren Buffett is on his way down to get his pound of flesh out of the deal, as he should.

On another note did you hear about the Los Angeles jury awarded David R. Martin Jr,. a Whittier resident and a switchman for Burlington Northern Santa Fe Railway, $4.9 million last week for an ankle injury he sustained when he jumped off a locomotive on November 18, 2008 just before a collision near a repair yard in Commerce California. The engineer on the locomotive was John Franks, and the suit claimed that there was a breakdown of communications when Martin unsuccessfully tried to warn Franks about the impending collision. Franks was operating the locomotive from the rear. BNSF claimed that Martin was also negligent for not climbing into the cab and applying the brakes instead of jumping off. Martin suffered a severe ankle fracture and has had an ankle fusion. His attorney, Anthony S. Petru argued to the jury that Martin, who now walks with the aid of a cane, was considering amputation of his right foot. His doctors also claim that he suffers from post traumatic stress disorder. The BNSF defense attorney, James S. Van Dam, argued that there was no evidence that any medical need for an amputation. The jury deliberated for 1 1/2 days before arriving at their $4.9 million verdict.