The California Department of Insurance recently reported that Jerry Buffington, 69, and Cynthia Russell, 47, offered guilty pleas in Kern County Superior Court to a single count each of workers compensation insurance premium fraud, along with eight counts each of tax evasion.
Ordered to Reimburse over $600,000
According to the report, the father and daughter were ordered to reimburse funds to California’s State Compensation Insurance in the amount of $475,100 and $127,899 to the Employment Development Department (EDD). The two are also required to serve a decade of probation.
Authorities noted that Buffington owned Safehome Inc., and his daughter served as chief financial officer.
In 2007, State Fund came across information that the company was underreporting its employee payroll to get away with paying the correct premium. After an audit, it was discovered that Safehome Inc. had not paid the proper amount of premiums for its workers comp policy to the tune of $477,285. Also, State Fund discovered the company was not operating in its proper classification, which was registration as an alarm company, yet a number of employees were operating as roofers. Authorities said the payroll tied to the roofing end of the business was never reported to both SCIF or EDD.
Both Convicted of a Single Felony Count
Buffington was convicted on a single felony count for violation of the insurance code section, false or fraudulent statement, four felony counts for failure to file return or report, and four felony counts for failure to gather or pay taxes.
Russell was convicted on a single felony count for false or fraudulent statement, four felony counts for failure to file return or report, and four felony counts for failure to gather or pay taxes.
Russell was also ordered to perform 400 hours of community service.
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].
©2012 Amaxx Risk Solutions, Inc. All rights reserved under International Copyright Law.
