Owners of SoCal Chicken Processing Plant Charged With Work Comp Premium Fraud

Wei Wen Wu, 54, and Feng Wen Lam, 49, both of Arcadia, California, were charged with 43 felony counts of insurance fraud, grand theft, and conspiracy after allegedly underreporting nearly $4.5 million in employee payroll.

The scheme reportedly fraudulently reduced their company’s workers’ comp insurance premium resulting in a loss of $1.7 million in unpaid insurance premiums.

A parallel investigation by the California Department of Industrial Relations reportedly uncovered wage theft from employees at the couple’s chicken processing business in El Monte.

Lam is the owner of Golden Food Inc., a chicken processing business employing butchers and meatpackers located in El Monte, which receives chicken carcasses and breaks them down into boxes of chicken parts for sale. Lam’s husband, Wu, operated the business.

The California Department of Insurance launched an investigation after receiving a referral from State Compensation Insurance Fund, which suspected the business of fraud after comparing the payroll reported during annual audits with the payroll reported to the Employment Development Department.

After obtaining search warrants for GFI, the CDI was reportedly able to obtain the true payroll records from the company’s computer and found fake tax reporting forms.

The investigation reportedly showed that between 2015 and 2021, GFI underreported its payroll to its workers’ comp carriers by $4.4 million, resulting in a loss of $1.6 million in premiums to four insurers, including State Fund.

In addition to the CDI investigation, the DIR investigation reportedly found employees were forced to clock out for breaks and continue to work, they were not paid overtime for work in excess of 40 weekly hours, and their pay stubs were falsified.

Also, it reportedly revealed Wu routinely deducted work hours from employees and falsely counted that pay as bonus. An audit by DIR found that Lam and Wu failed to pay at minimum $437,542 in labor to their 34 employees based on the minimum legal market value.

Wu and Lam are scheduled to appear in court on March 29.

The Los Angeles County District Attorney’s Office’s Healthcare Fraud Division is prosecuting the case.

–Insurance Journal staff