O.C. owner gets fine, jail time for workers comp fraud

October 30th, 2009
By Jan Norman

An Orange County business owner and his bookkeeper have pleaded guilty to workers compensation insurance fraud dating back to 2005, according to California Insurance Commissioner Steve Poizner.

Sanjiv Mahendra Shah of Placentia and his bookkeeper Abu M. Hossain of Chino Hills will pay $380,126 in restitution to two insurance companies, the State Compensation Insurance Fund and Fireman’s Fund, serve 120 days in jail plus three years’ probation. They will also pay fines that will be determined at their sentencing Jan. 26, 2010.

Shah owns Sonic Foods and United Pizza in Placentia, an umbrella company for a Papa John’s Pizza franchise. Shah has not returned a Register phone call.

The two men have pleaded guilty to 13 counts of fraud and one count of conspiracy in the case filed Oct. 15 in Orange County Superior Court, according to the Department of Insurance.

Shah and Hossain under-reported the company’s payroll more than 60%, totaling $6.71 million from 2005 to 2008, the state said. That under-reporting reduced workers’ compensation insurance premiums by $375,553 over three years.

The State Fund discovered the underpayment in May 2006 and forwarded the case to the Department of Insurance and Orange County District Attorney’s Office for investigation.

[b]“Whether it’s the State Fund or a private insurer, fraud costs all of us dearly,â€