Two California Men Charged in $18 Million Fraud Scheme

Two Southern California men have been charged with conspiring to defraud the State Compensation Insurance Fund of more than $18 million, according to the California Department of Insurance. David Zahler of Huntington Beach and David Tai of Hacienda Heights surrendered to police on November 26, following a two and a half year CDI investigation.

Zahler and Tai allegedly conspired to defraud the State Fund of over $18 million in insurance premiums they owed for the worker’s compensation policy issued to Staffing Services Inc., a temporary employment company with thousands of employees, CDI said. It is alleged that the men purposely misrepresented the types of employees for which they obtained workers comp coverage to pay $18 million less in premium payments. Zahler was the CEO and Tai the chief financial officer for Staffing Services. Staffing Services’ headquarters is located in the City of Bellflower, Calif.

CDI launched an investigation into Staffing Services after State Fund notified the California Department of Insurance of this suspected fraud. The investigation revealed that Zahler and Tai were allegedly providing false information to the State Compensation Insurance Fund to fraudulently obtain workers’ compensation insurance coverage for $18 million less than should have been due for their insurance coverage.

Zahler and Tai each face up to 20 years in prison and up to $40 million in fines if they are convicted of these crimes. The Los Angeles District Attorney’s Office is prosecuting this case.

Source: CDI