California Delivery Company Must Repay $2M for Workers’ Comp Scheme
A Los Angeles, California, couple was sentenced after an investigation reportedly found they underreported more than $21 million in employee payroll for their delivery companies.
John Nemandoust, 70, was sentenced to 60 days in county jail, and Annette Assil, 62, was sentenced to 30 days. The pair were sentenced to 10 years of felony probation and also ordered to pay $2.2 million in restitution for unpaid workers’ comp insurance premiums.
The California Department of Insurance launched an investigation into the three companies the owned by the couple: A-1 Valley Services, Prompt Delivery and Affordable Messenger. Investigators began looking at the companies after receiving information that two of the companies were uninsured. Investigators reportedly found that between 2013 and 2017, the couple only obtained workers’ comp coverage for Valley Services employees, while leaving Prompt Delivery and Affordable Messenger uninsured.
When employees from the uninsured companies sustained work-related injuries, the couple reportedly filed claims under Valley Services’ policy. Over the four-year period, at least 20 uninsured employees had claims improperly filed under Valley Services’ policy, according to the CDI.
A forensic audit reportedly found that the companies’ combined gross payroll exceeded $25 million, while they only reported roughly $1.4 million to their insurance carrier. This resulted in $21 million payroll underreporting. This scheme allowed the couple to avoid paying $3 million in workers’ comp premiums.
The Los Angeles County District Attorney’s Office prosecuted the case.
Topics
California
Workers’ Compensation
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