Three Californians Arrested for $5 Million in Workers’ Comp Insurance Fraud

The California Department of Insurance announced the arrests of three individuals charged with 48 counts of workers’ compensation insurance fraud, labor code violations and tax fraud. Monica Mui Ung of Alamo, Calif.; Joey Ruan of San Leandro, Calif.; and Tin Wai Wu, of Millbrae, Calif., each had bail set at $535,000.

CDI led the investigation, with assistance from the Employment Development Department. The investigation revealed that Ung owned and operated NBC General Contractors Inc., a general building contracting company. The company focused primarily on public works projects such as El Cerrito City Hall and Piedmont Elementary School. From May 2003 to May 2007, NBC was awarded at least 27 public works projects in Alameda, Contra Costa, San Francisco, San Mateo and Marin Counties.

The cost for NBC’s workers’ compensation insurance was determined by employee wages, total amount of payroll and job classifications of the employees. Ung, Ruan and Wu allegedly made intentional and material misrepresentations to their workers’ compensation insurance carrier to misclassify the type of work their employees were performing, as well as falsely reporting the hourly wage of more than 70 employees, saving them a significant amount in workers’ compensation premiums, CDI said.

By allegedly falsely reporting the type of work performed by employees and wages paid, NBC exposed the workers’ compensation insurer to additional risk and allowed the company to engage in unfair business practices by giving an advantage over employers who correctly reported their payroll and risk. Because public works projects are typically awarded to the lowest bidder, the alleged fraud gave NBC a significant advantage over competitors. This alleged false reporting resulted in a total loss of premiums of more than $1.45 million, CDI said.

Additionally, investigators allege that NBC did not pay overtime or sick leave to employees, as required under labor laws. These losses are estimated at $3.6 million in unpaid wages to 19 employees.

This case is being prosecuted by the Alameda County District Attorney’s Office.

Source: CDI