June 6, 2025 | San Jose, CA — MedLegalNews.com — In a landmark workers’ comp fraud case, a San Jose security firm owner has been sentenced for orchestrating a $3.4 million workers’ compensation fraud scheme. This case underscores the serious consequences of underreporting wages to avoid insurance premiums and highlights ongoing enforcement efforts by the California Department of Insurance.
Case Details
- Fraudulent Activity: The owner underreported employee wages to lower insurance premiums. This scheme caused major financial losses to the State Compensation Insurance Fund.
- Legal Outcome: Consequently, the court sentenced the defendant to 180 days in county jail. In addition, the defendant must serve two years of formal probation. Moreover, the court ordered restitution payments totaling $225,168.
Broader Implications
This case underscores the serious consequences of workers’ comp fraud and the importance of accurate payroll reporting. Employers must follow all legal and ethical responsibilities when classifying employees and reporting payroll. The California Department of Insurance continues to pursue aggressive enforcement against those who violate workers’ compensation laws.
Workers’ comp fraud is not a victimless crime—it increases costs for honest businesses and undermines the integrity of California’s workers’ compensation system. Regulators urge employers to comply fully with state laws to avoid legal penalties and ensure fair protection for workers.