Fraud, Tax Evasion, and Grand Theft
The apparent owners of a Fresno-based commercial floor care business have been arrested for workers compensation premium fraud, tax evasion, and grand theft, according to state Insurance Commissioner Dave Jones.
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Charged are Osvaldo Molina, 40, of Fresno; Fortino Galeno, 46, of Fresno; and Alicio Galeno, 41, of Los Angeles.
Molina and Fortino Galeno have each been charged with 61 felony counts and Alicio Galeno has been charged with 23 felony counts.
According to detectives from the San Joaquin Valley Premium Fraud Task Force, Floor Care Systems was incorporated in 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 counties, cleaning floors in supermarkets.
Under-reported $5,000,000 in Payroll
Investigators learned that between April 2007 and October 2011 Messrs. Molina and Galeno are suspected of under-reporting more than $5,000,000 in employee payroll to their insurance carrier.
The apparent fraud cost insurers an estimated $782,000 in workers comp premiums and caused the state to miss out on $187,000 in withholdings, according to Jones.
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, Jones added.
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.
Up to Five Years in Prison and $50,000
If convicted on all charges, Messrs. 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.
Author Michael B. Stack, CPA, Director of Operations, Amaxx Risk Solutions, Inc. is an expert in employer communication systems and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. He is a writer, speaker, and website publisher.www.reduceyourworkerscomp.com. Contact: [email protected].
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