California Business Owners Arrested for Premium Fraud

May 26, 2011

Valery Alena Thompson, president and CEO for Russell/Thompson, Inc., and her husband Earl James Thompson, a manager there, have been charged with one count each of violating section 11880(a) of the California Insurance Code for failing to report $900,000 in payroll.

If convicted, both could face up to 5 years in state prison and a $50,000 fine. Each of the subjects has been released on $10,000 bail.

According to investigators, Russell/Thompson, Inc. was a second tier framing subcontractor hired to construct dormitories at the University of California, Davis. They submitted certified payroll reports to the Employment Development Department (EDD) listing paid wages of over $900,000 to their employees; however, they failed to report this to the State Compensation Insurance Fund (SCIF).

A search warrant executed on the Thompson residence in Shasta County, also listed as their business address, resulted in the seizure of the company’s financial and business records. A financial audit was performed by SCIF and it was determined that the company had underreported close to $358,000 in premiums to SCIF, their insurance carrier.

Source: California Department of Insurance, Fraud Division

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