CA Commissioner Announces Arrest Of Business Owner For Insurance Premium Fraud

"Cheating the system creates an unfair advantage and puts employees at severe risk - it simply cannot be tolerated," said Commissioner Poizner. "Small businesses deserve a level playing field, and my department will continue working with its local partners to see that fair play is maintained."

According to CDI Investigators, in October 2009, the Department of Insurance, Fraud Division received a suspected fraud referral from the State Compensation Insurance Fund (SCIF) reporting Gutierrez, the owner of Sunwest Clean-up, Inc, misrepresented the job classification of his employees and concealed the true risk incurred by SCIF. Gutierrez reported his employees as janitorial staff and not demolition workers in order to obtain lower Workers' Compensation premiums. Gutierrez also underreported his payroll to SCIF. According to the referral, SCIF discovered that Gutierrez had falsified payroll reports for the years 2006-08. Gutierrez misrepresented the amount of his payroll to reduce the costs of Sunwest Clean-up's insurance premiums. The loss of workers' compensation premiums to SCIF is estimated to be approximately $54,745 over the three year period.

Based on evidence obtained from the investigation, a warrant was issued for Gutierrez's arrest on December 16, 2010 and he was arrested by the CDI Fraud Division on December 23, 2010 and booked into the Los Angeles County Sheriff's Department. Gutierrez's bail has been set at $90,000. If convicted, Gutierrez would be facing a maximum of 15 years in prison and up to $110,000 in fines. This case was investigated by the Los Angeles Fraud Division of CDI and is being prosecuted by the Los Angeles County District Attorney's Office. Gutierrez's arraignment date is pending.

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