A California business owner who reportedly questioned the nature and extent of a worker’s injury, was charged with fraud for allegedly underreporting payroll to their workers’ compensation insurance company by $2 million, and for failing to report $6.5 million in taxes owed to the state.
Investigation Solutions Inc. (ISI) reported the fraudulent activity to the DA’s Office in late 2011 and aided in the investigation until charges were filed last week.
Both Ronald Scott Dee, business owner of Venetian Stoneworks, and his bookkeeper, Pamela Palmer Quast, were charged with six felony counts of misrepresenting facts to their workers’ compensation carrier last week. Each was also charged with 28 felony counts of failing to file a tax return, 28 felony counts of failure to pay taxes and 24 felony counts of failure to pay disability insurance deductions.
Ironically, it all started with a phone call by Dee to his insurance carrier’s claims administrator. Dee expressed a concern about insurance fraud by one of his employees who was injured on the job.
As the claims adjuster spoke with the injured worker, she learned that his finger was amputated by an old table saw used without proper guards, in violation of OSHA standards. The injured claimant mentioned three earlier employee injuries on the same table saw which were never reported. Further, the injured employee mentioned receiving paychecks from two companies owned by Dee, but only worked for one. The second company, The Plumbing Studio in Santa Ana, uses undocumented workers who are all related to each other, he said.
With this information, the case was referred to Investigation Solutions, based on the suspicion of fraud that Dee and Quast had not been reporting all workers’ compensation injuries and appeared to be underreporting payroll using two companies. Further investigation found the company, founded in 2006, did not have workers’ compensation insurance until 2009, because they reportedly had no employees until that time.
Based on ISI’s initial review, a fraudulent activity report was filed with Orange County DA and Department of Insurance in late 2011. Evidence pointed to Venetian Stoneworks underreporting payroll, misclassifying employees and/or calling them independent contractors and failing to report claims. ISI continued to assist the Orange County DA’s office in obtaining evidence.
In addition to insurance fraud charges filed several weeks ago, Dee and Quast were also charged with underreporting payroll and failing to file tax reports with the Employment Development Department between 2006 and 2013. Dee may have pocketed taxes that were withheld from employee paychecks rather than forwarding it to the state, the DA’s Office stated. If convicted on all charges, both face penalties of more than 60 years in state prison. A pre-trial hearing is set for August 17.
Source: Investigation Solutions Inc.
Was this article valuable?
Here are more articles you may enjoy.