The California Department of Insurance and the Alameda County District Attorney's Office have filed charges against multiple suspects in an organized insurance and workers' compensation fraud scheme. The scheme defrauded insurance carriers over $5 million in estimated losses.
The fraud was orchestrated by Eric Andrew Oller and Brian Christopher Mitchell, former owners of Signature Painting and Construction Inc, (SPC), and Yama Sekander, owner of A-1 World Class Painting. Eric Oller also owned Valhalla Consulting (VC) which, along with A-1 was allegedly used as a shell company by Brian Mitchell to pay SPC employees.
From 2017 to 2018 SPC allegedly paid its employees using VC's bank account with the intent to illegally reduce the workers' compensation insurance premium. According to the allegations, Mitchell was illegally misclassifying employees and underreporting payroll costs to reduce premiums. As usual, a higher risk job comes with a higher premium, so a common way to facilitate workers' compensation fraud is by classifying individuals as office workers as opposed to warehouse employees, for example.
Mitchell and Oller have also been accused of entering into agreements to move employees from one company to another in order to save still more money on workers' compensation insurance. According to the allegations, some employees at SPC were paid "under the table" so the company could avoid paying or reporting appropriate taxes, and injured workers were instructed to report that they worked for another company than the one they truly worked for.
The carriers suffered losses of approximately $5 million as a result of this fraud scheme.
Oller and Mitchell were each charged with one felony count of conspiracy to commit a crime, six counts each of felony insurance fraud, and two counts of workers' compensation fraud.
Editor's Note: While workers' compensation fraud occurs quite often, a fraud of this scope is rare. Workers' compensation payouts can be huge, including medication, physical therapy, partial or complete disability, and premiums must reflect the potential of huge payouts.