San Diego County District Attorney Bonnie Dumanis recently announced that a grand jury has indicted the owners of Good Neighbor Services as well as six accomplices for a massive, ongoing insurance fraud and tax evasion scheme.
Two defendants, Hyok “Steven” and Woo “Stephanie” Kwon, own a janitorial company that provides cleaning staff to major hotels across San Diego, Los Angeles and Riverside Counties, including The Hotel Del Coronado, Loews Coronado, La Costa Resort and Spa, The Grand Del Marin La Jolla, L’Auberge Del Mar, The Ritz Carlton, Four Seasons, Hilton and Hyatt hotel chains.
The Kwons have been indicted on 11 counts of workers compensation premium fraud, 18 counts of payroll tax evasion and one count of extortion. The investigation uncovered a methodical and systematic shell game involving six straw owners. These straw owners were used to conceal the existence of hundreds of hotel workers to avoid paying millions of dollars in insurance premiums and payroll taxes.
If convicted of all charges, they each face up to 31 years in prison.
Scam Went for Nearly a Decade
For nearly a decade, Good Neighbor Services concealed their real payroll information in order to fraudulently obtain workers comp insurance from multiple companies including Travelers, Norguard, AIG, Southern Insurance, Everest National, Preferred Employers, State Compensation Insurance Fund and Employers Compensation Insurance. In doing this, the company avoided paying more than $3.6 million in insurance premiums and evaded paying over $3.3 million in payroll taxes.
Employees who were interviewed said they were paid with checks bearing the name of businesses other than Good Neighbor Services throughout the course of their employment, even though they wore uniforms with the Good Neighbor Services’ logo and identified the Kwons as the owners.
The employees also said they did not receive overtime pay or workers comp benefits when they were injured on the job, and they feared retaliation if they reported their injuries. One employee said she had to repeatedly ask for medical attention for her injury. When she was finally sent to a doctor, she found out later the Kwons sent her to a dentist rather than a physician.
The District Attorney’s Office is asking additional employees who worked with the Kwons and were denied workers comp benefits to come forward.
Anyone with information about the abuse of employee rights or the Kwons’ use of shell companies should call: 800-315-7672 or 800-927-4357.
Author Kori Shafer-Stack, Editor, Amaxx Risk Solutions, Inc. is an expert in post-injury response procedures and part of the Amaxx team helping companies reduce their workers compensation costs by 20% to 50%. www.reduceyourworkerscomp.com. Contact: [email protected].
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