San Jose Cop Charged With Wage Theft And Multi-Million Dollar Fraud Scheme

San Jose, CA (WorkersCompensation.com)- The Santa Clara County District Attorney’s Office has charged a San Jose police officer with using his private security company to commit wage theft, insurance fraud, tax evasion, and laundering around $18 million.

47-year-old Robert Foster, the owner of Atlas Private Security, his wife, and eight other company workers are all being charged with four counts of felony conspiracy to commit insurance fraud, money laundering, wage theft, and unemployment insurance fraud. They are also being charged with 39 additional felonies, which include a white-collar crime enhancement and extortion.

Foster and his co-defendants had allegedly been reporting inaccurate and false payroll, paying employees under the table, underreporting headcount, and underreporting employee injuries.  In one case, authorities say an employee was threatened with deportation if she continued to speak with attorneys about her rights under workers’ compensation laws after being injured on the job.

This arrest came only a few days after District Attorney Jeff Rosen had announced an array of social justice reforms that involved creating a Workers Exploitation Task Force that will investigate cases like this one.

Deputy District Attorney Mattia M. Corsiglia told WorkersCompensation.com the case was referred to the DA’s office by the US Department of Labor.  The six-month-long investigation was administered by the Santa Clara County District Attorney’s Office Bureau of Investigation in close partnership with the Employment Development Department, the California Department of Insurance, and California Department of Justice Bureau of Medical Fraud and Elder Abuse in the United States.

The probe showed that Foster allegedly hid approximately $8.09 million in payroll over three years, avoided roughly $578,716.56 in tax liability, and $560,293.15 in insurance premiums. To carry on their fraud scheme, the Atlas officials allegedly laundered approximately $18.20 million.  Foster allegedly also had failed to disclose that he owned and operated Atlas.

According to the felony documents obtained by WorkersCompensation.com: 

1.     Beginning on or about September 28, 2015 to present, Atlas Private Security Inc. (“ATLAS”), which is based in Santa Clara County, provided armed and unarmed security guard services (stationary and mobile), polygraph testing, and live-scan fingerprinting to businesses and residents throughout the greater San Francisco Bay Area. The COCONSPIRATORS, led by ROBERT FOSTER as the Chief Executive Officer, used ATLAS to run a complex workers’ compensation fraud, tax evasion, wage theft, and money laundering scheme for the purpose of significantly reducing payments to their insurance carrier Everest Insurance (“Everest”) and the California Employment Development Department (“EDD”).

2.     Beginning on or about September 28, 2015 to present, the COCONSPIRATORS, including but not limited to ROBERT FOSTER, MIKAILA FOSTER, VICTORA CRUZ and NAM LE, failed to report to the EDD approximately $8,092,998.25 in off-the-books payroll to ATLAS’ employees that resulted in unpaid payroll taxes of approximately $578,716.56.

3.     Beginning on or about November 14, 2017 to December 2019, the COCONSPIRATORS, including but not limited to ROBERT FOSTER, MIKAILA FOSTER, VICTORIA CRUZ, defrauded Everest of approximately $560,293.15.

4.     Beginning on or about December 4, 2017, the COCONSPIRATORS, including but not limited to ROBERT FOSTER, MIKAILA FOSTER, VICTORIA CRUZ, NAM LE, ALBERTO MARTINEZ, VICTOR PARRA and JASON KING, laundered approximately $18.2 million dollars for the purpose of carrying on their criminal activity or knowing that the money was the proceeds of their criminal conduct.

5.     Beginning on or about March 5, 2018, ROBERT FOSTER and RICHARD MCDIARMID failed to alert and provided false information to ATLAS’ insurance carriers regarding a serious injury to an employee that resulted in approximately $1,126,208.79 in medical bills. Tax-funded MediCal was billed the entire amount, paying $186,810.35. Since May 2018 to the present, the injured employee received approximately 60 hours a month of In-Home Supportive Services costing taxpayers $24,223.58. This deceptive conduct let the COCONSPIRATORS avoid an increase in ATLAS’ insurance premiums.

The COCONSPIRATORS reduced insurance premium amounts paid to Everest and contributions owed to EDD by reporting false and inaccurate payroll, headcount, misclassifying employees, paying employees off the books, and underreporting injuries through a variety of means such as: 

1.     Beginning on or about April 1, 2016 to October 1, 2019, the COCONSPIRATORS, led by ROBERT FOSTER and MIKAILA FOSTER, underreported ATLAS’ quarterly payroll to the EDD to avoid paying taxes, including mispresenting employee headcount and failing to disclose under-the-table salaries.

2.     During this approximate period the COCONSPIRATORS paid ATLAS’ employees approximately $2,395,860.53 in undeclared and unreported under-the-table wages — outside of ATLAS’ BBSI and ADP payroll system. This had the effect of concealing payroll, which included insurance premiums and EDD tax contributions.

3.     To further their scheme, beginning on or about November 16, 2016 to present, the COCONSPIRATORS used and traded on ROBERT FOSTER’S position Of trust within the community as an active-duty San Jose Police Department Officer and self-described expert in lie detection, including, but not limited to, promoting and protecting ATLAS’ business interests.

4.     Beginning on or about May 17, 2017 to December 31, 2019, the COCONSPIRATORS, led by ROBERT FOSTER, made material misrepresentations and omissions to Everest. This included, but was not limited to, failing to disclose accurate employee headcount, payroll, under-the-table pay, misclassifying employees, and fraudulent subcontractor arrangements.

5.     Beginning on or about June 1, 2017, the COCONSPIRATORS, including but not limited to ROBERT FOSTER, MIKAILA FOSTER, VICTORIA CRUZ and NAM LE, through NAM LE’s company Defense Proteehon Group (“DPG”), operated an illegal subcontractor scheme to conceal an additional $5,697,137.72 in ATLAS’ payroll and employee headcount from Everest and the EDD.

6.     Beginning on or about December 15, 2017, the COCONSPIRATORS failed to pay ATLAS employees overtime and later dissuaded those employees from accurately reporting on-the-job injuries and wage theft violations; thereby shifting the financial burden onto the employee as well as reducing ATLAS’ insurance premiums. One method used to dissuade employees was to threaten immigration consequences.

7.     Beginning on or about December 2017, in order to promote and carry on their illegal scheme, ROBERT FOSTER, MIKAILA FOSTER, VICTORIA CRUZ, NAM LE, ALBERTO MARTINEZ, VICTOR PARRA and JASON KING conducted approximately $17.7 million dollars in illegal financial transactions in violation of money laundering laws.

8.     Beginning on or about April 30, 2019, ROBERT FOSTER and VICTORIA CRUZ violated money laundering laws by conducting approximately $500k in illegal financial transactions knowing the money was the proceeds of criminal conduct.

In a press release, District Attorney Rosen noted, "This Office will root out and prosecute anyone – whether they wear a badge or not - taking criminal advantage of workers. Our new task force will protect and heal the victims of labor trafficking, wage theft, and illegal exploitation and raise awareness about how these insidious crimes are attacks on our communities of color."

Deputy District Attorney Corsiglia also told WorkersCompensation.com that if found guilty, the punishment that could be handed down is "prison and fines." The arraignment date is November 30, 2020 at the Hall of Justice in San Jose.

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