L.A. Business Owner Sentenced for Comp Fraud

December 6, 2004

A Los Angeles business owner was sentenced to pay $1.8 million in restitution and fines this week after a three-year joint investigation involving the California Department of Insurance found he had underreported wages at his picture framing operation by some $7 million.

Randy Greenberg, 46, of Los Angeles, was sentenced in Los Angeles County Superior Court on Nov. 29 to a two year suspended state prison term, and placed on five years probation on four felony counts of workers’ compensation fraud and one felony count of fraud and embezzlement.

The case was prosecuted by the Los Angeles County District Attorney’s Office Workers’ Compensation Insurance Fraud Division, working jointly with the California Department of Insurance. The Department received assistance from the State Compensation Insurance Fund (SCIF) and American International Group (AIG), Internal Audit Support Group.

CDI investigators reportedly discovered that Greenberg and his picture framing business, KBST Inc. were defrauding State Compensation Insurance Fund and AIG from 1998 to 2001. Greenberg’s schemes used shell corporations, fraudulent workers’ comp applications, underreporting of payroll and manipulation of employee job classifications codes to hide some $7 million in wages.

Greenberg was ordered to pay $677,693 in restitution to SCIF, $276,413 to AIG, and $863,000 to the Workers’ Compensation Fraud Assessment Commission for the cost of the investigation.

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