CA Insurance Commissioner Dave Jones Announces Arrests In Workers Compensation Premium Fraud Case
Los Angeles, CA (WorkersCompensation.com) - California Insurance Commissioner Dave Jones today announced that Osvaldo Molina, 40, of Fresno, Fortino Galeno, 46, of Fresno, and Alicio Galeno, 41, of Los Angeles, have been arrested for workers' compensation premium fraud, failure to pay taxes, tax evasion, and grand theft. Molina and Fortino Galeno have each been charged with 61 felony counts and Alicio Galeno has been charged with 23 felony counts.
"These deceitful business owners epitomize the underground economy in California," said Commissioner Jones. "Bringing them to justice will level the playing field for honest business owners and help to keep California businesses and employees further protected."
According to detectives from the San Joaquin Valley Premium Fraud Task Force, Floor Care Systems was incorporated in the State of California in July 2002 by Molina, however, the investigation revealed that Fortino Galeno was the true owner of the business. Floor Care Systems operated in Fresno and Los Angeles County cleaning floors in supermarkets. Investigators learned that between April 2007 and October 2011 Molina and Galeno are suspected of under reporting over $5,000,000 in employee payroll to their insurance carrier.
This fraud has cost insurers an estimated $782,000 in workers' compensation premiums and caused the State to miss out on $187,000 in withholdings. Detectives also found evidence indicating that Alicio Galeno failed to pay minimum wage to employees and locked employees inside their work area without proper supervision. Galeno made employees work over eight hours a day six days a week without compensating them for overtime benefits.
The investigation into Floor Care Systems centered on the misrepresentation of employee payroll to insurance carriers reducing the proper premium, and improper reporting to the Employment Development Department (EDD). Molina and Fortino Galeno were each charged with four counts of workers' compensation insurance fraud, 17 counts of failure to pay taxes, 17 counts of tax evasion, and 23 counts of grand theft. Their bail was set at $560,000 each.
Molina and Fortino Galeno were booked into Fresno County Jail. Alicio Galeno was charged with 23 counts of grand theft and his bail has been set at $345,000. He was booked into LA County Jail.
"I commend the diligent efforts of the task force, including the detectives from my Department and the prosecutors and support personnel from the District Attorney's offices in seeing this case through," added Jones.
The San Joaquin Valley Premium Fraud Task Force is comprised of prosecutors, investigators, and support personnel from District Attorney's Offices in Fresno, Merced, Tulare, Kings, and Kern Counties, the Fraud Division of the California Department of Insurance, the EDD's Investigation Division, and special agents from the National Insurance Crime Bureau.
This case is being prosecuted by the Fresno County District Attorney's Office. If convicted on all charges, Molina and Fortino Galeno could receive up to one year in county jail, or receive two to five years in prison for each felony count or pay fines up to $50,000 or double the value of the fraud, or by both imprisonment and fine. Alicio Galeno could receive up to one year in county jail or state prison for each felony count.