http://www.10news.com

Roofing Co. Officials Indicted For Workers' Comp Fraud
Largest Workers' Comp Fraud Case In San Diego County

POSTED: 2:54 pm PST March 9, 2006
UPDATED: 3:46 pm PST March 9, 2006

SAN DIEGO -- The owners of an Escondido-based roofing company and 10 high-level employees were indicted in a $4.5 million workers' compensation fraud scheme, San Diego County's district attorney announced Thursday.

The two owners and managers of Mayer Roofing Co. are accused of devising a scam to misclassify wages and falsify timecards so they wouldn't have to pay as much in workers' compensation premiums, Bonnie Dumanis alleged.

The case is the largest of its kind in San Diego County and one of the largest in California, Dumanis said.

"We believe the owners of this company, right down to the office manager, knew that timecards were being falsified in order to obtain an unfair advantage on workers' comp premiums," Dumanis said.

"Key members of this company were scamming the system," she said. "This illegal practice results in honest employers losing contracts and ultimately driving them out of business."

Beginning in December 2004, the San Diego District Attorney's Office and the state Department of Insurance served 15 search warrants at Mayer Roofing offices in San Diego, Riverside and Los Angeles counties, prosecutors said.

Forty-five computers and 187 boxes of evidence were seized.

Investigators, working with the State Compensation Insurance Fund, determined that Mayer Roofing inflated hourly wages to qualify for workers' compensation premium rates reserved for companies paying workers more than $20 per hour, the indictment alleges.

"It's a shell game, really," Dumanis said. "That's what they're doing."

Workers in the field, many of whom were Spanish-speaking, might not have been aware of what was happening when they signed their timecards, said Deputy District Attorney Ernie Marugg.

"They were told, 'This is the law, you have to do it,"' the prosecutor said.

Some workers who testified before the grand jury were surprised when they saw how their timecards were filled out, Marugg said.

"It's quite an elaborate scheme," said fellow prosecutor Dominic Dugo.

The defendants, who include Mayer Roofing project managers and human resources officials, each face one count of conspiracy and three counts of insurance fraud, Marugg said.

If convicted, each defendant faces up to 17 years in state prison and a fine of up to $9 million, the prosecutor said.

After Mayer Roofing was indicted, operators of other companies in the construction industry called to say "It's about time," Marugg told reporters.

He said the fraudulent activities in which Mayer Roofing was allegedly involved over a three-year period have the potential to kill smaller companies.

"It's not the tip of the iceberg, but it's a big part of it," the prosecutor said.

The indictment, returned last month, names company owners Paul Mayer, 52, and David Gordon Archer, 62, along with corporate officers James Arthur Wiese, 53, and Robert Gomez Del Real, 51, all of Escondido.

Also indicted were:
Armando Jasso, 52, of Escondido
Laura Elena Caballero, 36, of Escondido
Robert Osuna, 38, of Fallbrook
Judy Kay Toledo, 50, of Vista
Mark Daniel McMahon, 46, of Newhall
Richard Glen Hart, 48, of Hemet
Martin Jeffrey Stout, 45, of Riverside
Blake Carlos Harrison, of Temecula
Mayer Roofing was licensed in 1993 to provide roof installation for new construction projects throughout Southern California and Fresno, officials said.

Besides Escondido, the company has offices in Riverside, San Fernando and Bakersfield that collectively employ about 450 people, Marugg said.

The company could be shut down if there are convictions in the case, the prosecutor said.

Marugg said over the last five years, he hasn't seen a similar case proceed to trial without some sort of plea bargain.

Attorneys for some of the top indicted company officials have been in contact with prosecutors, he said.

Dumanis said a message needs to go out to companies contemplating workers' compensation insurance fraud.

"You can't fudge, you can't scam," she said.