|For Immediate Release
Case # 11CF3130
February 27, 2012
|Susan Kang Schroeder
Chief of Staff
ROOFING CONTRACTOR SENTENCED FOR INSURANCE FRAUD AND FAILING TO PAY TAXES
*Fraud discovered after worker fell from roof and was denied workers’ compensation insurance
SANTA ANA – A roofing contractor was sentenced Friday to one year in jail and was ordered to pay $510,000 in restitution for failing to provide workers’ compensation insurance for an injured employee and failing to pay insurance premiums for unclaimed employees, who were paid in cash. Michael Amzie Holley, 43, Murrieta, pleaded guilty to a court offer Feb. 26, 2010, to two felony counts of perjury by declaration, two felony counts of recording false and forged instruments, one felony count of misrepresenting facts to the State Compensation Insurance Fund (SCIF), seven felony counts of making a fraudulent statement, one felony count of presenting a fraudulent material statement to obtain compensation, one felony count of making a false statement to discourage an injured worker from claiming benefits, one felony count of willfully failing to pay taxes, one felony count of failing to file a return with the intent to evade taxes, and a sentencing enhancement for aggravated white collar crime over $500,000.
At the time of the crime, Holley was a roofing contractor and owner of So Cal Roofing. The defendant purchased a minimum workers’ compensation policy from SCIF and failed to state that he employed subcontractors, paid workers in cash, hired unlicensed employees, and leased employees from other companies. Holley paid his employees in cash to hide the fact that So Cal Roofing had workers. He received insurance based on his false declaration and entered into a contract requiring SCIF to cover all workers employed by Holley, even those employees unknown to the insurance company. Holley submitted inaccurate payroll reports to SCIF, resulting in underpayment of insurance premiums. To hide the fraud, Holley failed to file an accurate tax return to avoid paying taxes to the State on the cash payments made to his employees.
On March 18, 2003, one of Holley’s employees was injured when he fell off a roof, and subsequently filed a worker’s compensation insurance claim. Holley denied that the injured employee worked for him, thus denying the injured employee his workers’ compensation insurance benefits. On Feb. 24, 2004, and March 2, 2005, Holley fraudulently signed under penalty of perjury that he had no employees at So Cal Roofing and filed these documents with the California State Contractor’s Licensing Board to make him exempt from securing worker’s compensation insurance.
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.