|For Immediate Release
Case # 09CF1067
|Susan Kang Schroeder
Public Affairs Counsel
ROOFING CONTRACTOR CONVICTED IN CALIFORNIA’S LARGEST PREMIUM INSURANCE FRAUD SCAM
*Defendant’s wife is charged as a co-defendant in this case
SANTA ANA – A roofing contractor was convicted today of committing premium insurance fraud with his wife, in one of the largest known Workers’ Compensation Insurance fraud case in California’s history. Michael Vincent Petronella, also known as Michael Constantine, 51, was found guilty by a jury of 33 felony counts of insurance fraud and the sentencing enhancement for aggravated white collar crime over $500,000 was found true. The defendant now faces a sentence ranging from probation up to 48 years and eight months in state prison at his sentencing on April 23, 2010, at 9:00 a.m. in Department C-42, Central Justice Center, Santa Ana. Restitution will be determined at a later date.
Petronella’s wife Devon Lynn Kile, 44, both of Laguna Hills, is also charged in this case. Kile is in-custody on $250,000 bail and is scheduled for a pre-trial mental health competency hearing Feb. 18, 2010, at 9:00 a.m. in Department C-58, Central Justice Center, Santa Ana.
“This case is an outrageous example of a person who lavishly spent illegal profits on luxury goods by cheating the Workers’ Compensation Insurance system and legitimate businesses that play by the rules,” said Orange County District Attorney Tony Rackauckas. “Cheaters who defraud the system will be trading in their Prada’s for prison garb.”
“We simply will not tolerate anybody scamming the system and driving up the costs for legitimate businesses,” said Insurance Commissioner Steve Poizner. “I’m pleased that a jury convicted these swindlers on 33 counts of insurance fraud, helping execute justice and remind others committing workers’ compensation fraud that we will find you and you will be prosecuted.”
WHAT IS PREMIUM INSURANCE FRAUD?
California law requires that all employers maintain workers’ compensation insurance for their employees. Payroll records showing the number of employees and their income must be submitted to both the workers’ compensation insurance company and EDD, who oversee the collection of payroll taxes. Workers’ Compensation Insurance rates are determined by a formula, which takes into consideration the number and type of employees and the company’s history of injury claims.
Premium insurance fraud is committed when an employer intentionally misrepresents to the State or insurance company the number of employees, the type of work performed, the amount of payroll, and the loss history. These illegal misrepresentations allow deceitful employers to calculate and purchase workers’ compensation insurance at a significantly lower premium rate, or to avoid purchasing the insurance at all. This practice places their competitors at a disadvantage because it forces them to compete against a company with fraudulently lower operating costs.
Premium fraud drives up the cost of insurance premiums for legitimate businesses that pay higher rates for their employees’ workers’ compensation insurance coverage. These legitimate businesses are less competitive against crooked companies who are able to under-bid their competitors.