A San Jose business owner has been accused of underreporting payroll by several million dollars in order to keep workers’ compensation insurance costs low. Detectives from the California Department of Insurance arrested Troy Carson, owner of Security Code 3, Inc., for running an alleged scheme that ultimately swindled the company’s insurance provider out of $3.2 million in premiums.
What The Investigation Found
Detectives discovered evidence that Carson implemented the fraudulent scheme because an increasing number of employees were becoming injured, thereby raising the workers’ compensation premiums for Security Code 3, Inc. Faced with these increasing costs, authorities allege that Carson founded a new company, SC3 DVBE Security Services, Inc., and then proceeded to underreport the number of employees and the payroll to the company’s insurance provider.
Other Parties Involved in Complex Scheme
According to evidence gathered during the investigation, there were other parties who allegedly participated in this elaborate scheme. Victoria Cruz and Lanette Wiegand, members of Security Code 3’s management team, were responsible for submitting the payroll and insurance premium payments for a period of six years. These two employees allegedly underreported the payroll by more than $12 million, which led to fraudulently low workers’ compensation insurance premiums. Like Carson, they are charged with felony counts of workers’ compensation insurance premium fraud.
Insurance broker Jaime Lugo faces fraud-related charges as well. Detectives found evidence that Lugo not only knew about the scheme, but he also wrote a new insurance policy for SC3 DVBE Security Services, Inc.
“When business owners cheat the system by operating in the underground economy,” said Insurance Commissioner Dave Jones, “they create an unfair advantage that puts legitimate businesses at risk.”
Holding Fraudulent Business Owners Accountable
While we like to believe that all business owners are honest, this is not the case. It is important to hold dishonest parties accountable for their fraudulent actions. If you have questions about your rights as an employee, especially regarding workers’ compensation benefits , contact Accident Recovery Legal Center today at 1-888-931-WORK (9675) to schedule a free consultation with an experienced San Jose or Salinas workers’ compensation attorney.