Business Owner Arrested for Insurance Premium Fraud

California resident Benjamin Gutierrez of the Los Angeles area business owner has been arrested on three felony counts of insurance premium fraud, risking his employees’ safety should a worksite incident occur, the California Department of Insurance announced. Premium fraud is a specific type of insurance fraud in which an employer provides false information to the insurance carrier in order to lower the insurance premiums due.

According to CDI Investigators, in October 2009, the Department of Insurance, Fraud Division received a suspected fraud referral from the State Compensation Insurance Fund (SCIF) reporting Gutierrez, the owner of Sunwest Clean-up Inc, misrepresented the job classification of his employees and concealed the true risk incurred by SCIF. Gutierrez reported his employees as janitorial staff and not demolition workers to obtain lower workers’ compensation premiums. Gutierrez also underreported his payroll to SCIF. According to the referral, SCIF discovered that Gutierrez had falsified payroll reports for the years 2006-08. Gutierrez misrepresented the amount of his payroll to reduce the costs of Sunwest Clean-up’s insurance premiums. The loss of workers’ compensation premiums to SCIF is estimated to be approximately $54,745 over the three-year period.

Based on evidence obtained from the investigation, a warrant was issued for Gutierrez’s arrest on Dec. 16, 2010, and he was arrested by the CDI Fraud Division on Dec. 23, 2010 and booked into the Los Angeles County Sheriff’s Department. Gutierrez’s bail has been set at $90,000. If convicted, Gutierrez would be facing a maximum of 15 years in prison and up to $110,000 in fines. This case was investigated by the Los Angeles Fraud Division of CDI and is being prosecuted by the Los Angeles County District Attorney’s Office. Gutierrez’s arraignment date is pending, CDI said.

Source: CDI