Workers' Comp Fraud Cases Totalling $6.7 Million

Insurance Commissioner Steve Poizner today announced Sanjiv Mahendra Shah, 53, of Placentia and Abu M. Hossain, 59, of Chino Hills have pled guilty to 13 counts of fraud and one count of conspiracy in a workers' compensation insurance fraud case that began in 2005 and resulted in their arrests Oct. 15, when they surrendered at the Orange County Superior Court Central Justice Center.

"Whether it's the State's fund or a private insurer, fraud costs all of us dearly," said Commissioner Poizner. "Our department and its dedicated investigators will not rest in bringing these criminals to justice. I want to make it clear - if you commit these types of crimes, we will find you and prosecute you."

As part of the plea agreement, Shah and Hossain have agreed to pay $380,126 in restitution to the State Compensation Insurance Fund and Fireman's Fund. Each will serve 120 days in jail, serve three years probation and pay an undetermined amount of fines. Sentencing is Jan. 26, 2010.

Shah owns Sonic Foods and United Pizza. Hossain was Shah's bookkeeper. From 2005 to 2008 it was alleged that Shah, with Hossain's help, underreported employee payroll by $6.71 million to lower his workers' compensation insurance premiums to the State Compensation Insurance Fund and later the Fireman's Fund. Combined, the premium losses to State Fund and Fireman's Fund over the three-year period totaled $375,553

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The fraudulent activity was discovered by State Fund in May 2006 and forwarded to the California Department of Insurance and Orange County District Attorney's Office for investigation. 

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INSURANCE AGENT SENTENCED TO SERVE 13 YEARS IN PRISON, PAY $434,000 RESTITUTION FOR STEALING TO FUND GAMBLING HABIT

 

Insurance Commissioner Steve Poizner announced today that former insurance agent Maria Elna Flora, 59, of Sacramento, pled no contest to one count of first degree burglary and eleven counts of grand theft. Flora was sentenced to serve 13 years 4 months in state prison and ordered to pay $434,278.69 in restitution to her victims.

“There is no excuse for insurance agents to steal from their clients,” said Commissioner Poizner. “Any individual who attempts to defraud victims will learn this lesson the hard way – by serving time in prison and repaying every dime they stole.” 

From January 2005 through August 2007, Flora allegedly convinced at least 12 individuals living in Butte, El Dorado, Sacramento, San Joaquin, Solano, Stanislaus and Yolo Counties to invest between $5,000 and $88,000 with her. Flora allegedly encouraged her victims to shift their savings into short-term investments with her that promised returns ranging from 10 to 20 percent. Flora allegedly told her victims that their funds would be used to make real estate loans to investors who would pay high interest rates.  However, in most cases, Flora made only a few interest payments to investors. She purportedly promised to pay her victims at a later date, but never did. 

CDI investigators discovered that Flora allegedly used her victim’s money to fund an expensive gambling habit. From approximately January 2005 to August 2007, Flora purportedly used the money for almost daily slot play at Thunder Valley Casino. 

Flora was arrested on June 18 as a result of a joint operation by the California Department of Insurance investigators, the Yolo County District Attorney’s Office and the California Attorney General’s Office. The case was prosecuted in Sacramento by the California Attorney General’s Office. She was sentenced on Oct. 8. 2009

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TWO WEST COVINA MEN SURRENDER ON WORKERS’ COMP PREMIUM FRAUD CHARGES

Insurance Commissioner Poizner announced today that two men surrendered to the Los Angeles County Sheriff’s Department Thursday. Steven Antu, 40, and Pete Albano, 51, both of West Covina, are each charged with three felony counts of premium fraud. The men are being held on $186,518 bail. If convicted on all counts, Antu and Albano each face a maximum of 15 years in state prison and up to $372,000 in fines. 

“Falsely reporting information to your workers comp insurer in order to save money is wrong and illegal,” said Commissioner Poizner. “If you refuse to play by the rules, CDI detectives will track you down and help bring you to justice.”

In January 2009, the Department of Insurance received a referral from the State Compensation Insurance Fund alleging that that Steven Antu and Pete Albano, owners of United Security Agency (doing business as Patriot Protection Service), underreported their workers’ compensation payroll on their quarterly payroll reports from 2005 through 2007. SCIF alleged that the company misrepresented the amount of payroll purposely, in an attempt to reduce the cost of their insurance premiums. The estimated loss to SCIF is approximately $186,000 over the three year period. 

Based on evidence obtained from the CDI investigation, warrants were issued for both Antu’s and Albano’s arrests on September 17, 2009. The men surrendered to authorities on September 24, 2009.