April 28, 2025 | Sacramento, CA — MedLegalNews.com — California insurance fraud case leads to major sentencing in Sacramento: On April 23, 2025, Martha Toro, owner of MT Janitorial Services, pled no contest to felony charges of insurance fraud and tax evasion. The Honorable David Bonilla sentenced her to 270 days in county jail and two years of formal probation for each violation. In addition, Toro must pay $1,454,130 in restitution, fines, and interest. Of this amount, $848,370 goes to Markel Insurance, while $605,760 is owed to the Franchise Tax Board (FTB).
California Insurance Fraud Case Spanning Years
In February 2020, the California Department of Insurance (CDI) launched an investigation after Markel Insurance flagged suspicious activity. Toro had significantly under-reported her employee count to lower her workers’ compensation premiums illegally.
A joint investigation by CDI and FTB revealed that between 2013 and 2020, Toro consistently misrepresented her payroll data. As a result, Markel Insurance suffered losses exceeding $800,000. Meanwhile, the FTB discovered that Toro falsified her state tax returns between 2016 and 2020 to avoid paying taxes.
Broader Impact on Californians
Tax evasion harms every Californian by reducing critical funding for public services. Cracking down on underground economic activity, like Toro’s, helps close the state’s growing tax gap.
Insurance fraud also creates serious risks for workers. By lying about her workforce, Toro left employees vulnerable if injured on the job. Moreover, her illegal actions gave her business an unfair advantage, allowing her to undercut legitimate companies and harm fair competition. California Janitorial Services Owner
Source: Sacramento County District Attorney’s Office
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FAQs About the California Insurance Fraud Case Involving MT Janitorial Services
What led to the investigation of MT Janitorial Services in this insurance fraud case?
The investigation began in 2020 after Markel Insurance identified suspicious discrepancies in payroll reports submitted by MT Janitorial Services. This prompted the California Department of Insurance (CDI) to launch a formal inquiry into potential insurance fraud.
How much did the California insurance fraud scheme cost insurers and the state?
Martha Toro’s fraud resulted in over $848,000 in losses to Markel Insurance and more than $605,000 in unpaid taxes to the California Franchise Tax Board, totaling over $1.4 million in damages.
How does underreporting payroll constitute insurance fraud in California?
Underreporting payroll to lower workers’ compensation premiums is a violation of California insurance fraud statutes. It misrepresents risk to insurers and puts employees at serious risk if injured on the job.
What penalties did the court impose for this insurance fraud case conviction?
Toro was sentenced to 270 days in county jail, two years of formal probation for each felony, and must pay full restitution. The sentence reflects the severity of both insurance and tax violations.
How does this insurance fraud case affect other businesses and workers?
Fraudulent business practices distort fair market competition, allowing dishonest operators to undercut legitimate employers. It also deprives workers of legal protections and benefits in the event of injury or illness.