Thread: Roofing Co. Officials Indicted For Workers' Comp Fraud

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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.

http://www.signonsandiego.com

12 plead not guilty to benefits fraud

Escondido company named in investigation
By Dana Littlefield
UNION-TRIBUNE STAFF WRITER
March 10, 2006

A dozen officials from an Escondido-based roofing company have been charged in what prosecutors said was a fraudulent workers' compensation scheme worth more than $4.5 million over three years.

The officials from Mayer Roofing Company are accused of falsifying employee timecards to allow the company to pay lower insurance premiums. A San Diego grand jury indicted the group Feb. 9 on felony charges of conspiracy and insurance fraud.

The company's co-owners – Paul Frederick Mayer, 52, and David Gordon Archer, 62, – and other corporate officers, project managers and human resource officials charged in the case pleaded not guilty yesterday in San Diego Superior Court.

If convicted, they each face up to 17 years in prison and fines of up to $9 million.

District Attorney Bonnie Dumanis said during a news conference yesterday that company officials were “dummying up” timecards so that low-wage workers would qualify for premium rates typically reserved for workers who earn more than $20 an hour.

In other words, low-wage earners were reclassified as high-wage earners – such as journeymen and managers – who are less likely to be injured on the job, prosecutors explained.

“It's a shell game really,” Dumanis said.

Because Meyer Roofing paid lower premium rates from 2001 to 2003, they were able to underbid other companies vying for work on new construction projects throughout Southern California and Fresno. The other roofing companies couldn't compete, Dumanis said.

“We've had calls from other companies,” said prosecutor Ernie Marugg. “They say, 'It's about time. I'm glad you're doing this.' ”

The 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 beginning Dec. 8, 2004. Investigators seized 45 computers and 187 boxes of evidence, prosecutors said.

Working with State Compensation Insurance Fund officials, the investigators discovered that Meyer employees had reported being injured at times when they weren't listed as working, according to their timecards.

Marugg said many of the workers who signed the fraudulent timecards were directed to do so by their supervisors and were unaware that their actions were illegal. Some were Spanish-speaking employees who may not have understood what they were signing, the prosecutor said.

Marugg said the investigation is ongoing.

Lawyers for the 12 indicted officials said little after their clients were arraigned yesterday, except that the company is still doing business and its owners look forward to their day in court.

In addition to the two co-owners, the other officials charged are:

James Arthur Wiese, 53; Robert Gomez Del Real, 51; Armando Jasso, 52; and Laura Elena Caballero, 36, all of Escondido. Roberto 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; and Blake Carlos Harrison, 45, of Temecula.





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Dana Littlefield: (619) 542-4590; dana.littlefield@uniontrib.com