Calif. State Fund Awarded $135,000 in Fraud Case

June 30, 2004

State Compensation Insurance Fund will collect $135,000 in restitution from a San Diego County-based construction firm as part of the sentence in a workers’ compensation insurance fraud case.

Ray Charles Gauthier – who owns Gauthier Construction Inc. – was ordered to pay restitution as part of the June 29 sentence in San
Diego County Superior Court following his conviction on felony workers’
comp and unemployment insurance fraud.

State Fund – which assisted the San Diego County District Attorney’s
Office in its investigation – has insured Gauthier Construction – which
specializes in framing – since 2000.

State Fund audits reportedly revealed that Ray Charles Gauthier falsified information to avoid paying proper workers’ comp premiums. It was discovered that Gauthier was engaged in a “cash pay” scheme with a subcontractor. He would pay a subcontractor a percentage of the cash payroll so that the subcontractor could use that money to pay Gauthier employee’s cash wages. The cash pay to employees was not reported to State Fund.

State Fund forwarded the audit and other evidence to the San Diego
District Attorney’s Office for review. Ray Gauthier was indicted by a San Diego Grand Jury. He was later booked and released.

A San Diego County Superior Court judge sentenced Ray Charles Gauthier to 3 years probation. In addition to paying State Fund, Gauthier also agreed to pay approximately $60,000 to the State Employment Development Department and $102,000 to the State Franchise Tax Board.

Ray Charles Gauthier was convicted on felony workers’ comp
insurance premium fraud (Insurance Code 11880) and unemployment insurance fraud (Insurance Code 2117.5), according to San Diego County Deputy District Attorney Ernie Marugg.

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