Three Bay Area residents were arrested Tuesday in connection with a $5 million dollar workers' compensation insurance fraud scheme, Insurance Commissioner Steve Poizner announced.
The suspects, 49-year-old Monica Mui Ung of Alamo, 31-year-old Joey Ruan of San Leandro, and 28-year-old Tin Wai Wu of Millbrae, face 48 counts of workers' compensation insurance fraud, labor code violations and tax fraud.
"When businesses cheat the system to save money, they are only setting themselves up to pay later - by serving time in prison," Poizner said. "The Department of Insurance will not stop going after fraud perpetrators until every one is brought to justice."
An investigation, led by the California Department of Insurance and assisted by the Employment Development Department, exposed that Ung owned and operated general building contracting company NBC General Contractors Inc., which focused primarily on public works projects.
Investigators looked at the company's employee wages, total payroll and employees' job classifications to determine the cost of NBC's workers' compensation insurance.
They discovered that the three suspects were submitting a false report to their workers' compensation insurance carrier about the type of work their employees were performing and their hourly wages, according to Poizner.
Investigators claim the fraud thereby exposed the workers' compensation insurer to additional risk and allowed the company to engage in unfair business practices by helping them gain an advantage over competing employers who submitted accurate reports of their payroll and risk.
The total loss of the false reporting is estimated at $1.45 million. An additional loss of $3.6 million is estimated in unpaid wages to 19 employees who were not compensated for overtime or sick leave.
The case is being prosecuted by the Alameda County district attorney's office.