ROOFING CONTRACTOR SENTENCED TO 10 YEARS IN PRISON IN CALIFORNIA’S LARGEST PREMIUM INSURANCE FRAUD SCAM

Orange County District Attorney
Press Release


Tony Rackauckas, District Attorney
401 Civic Center Drive West
Santa Ana, CA 92701

For Immediate Release
Case # 09CF1067
 


 


November 4, 2009

Susan Kang Schroeder
Chief of Staff
Office: 714-347-8408
Cell: 714-292-2718

Farrah Emami
Spokesperson
Office: 714-347-8405
Cell: 714-323-4486

ROOFING CONTRACTOR SENTENCED TO 10 YEARS IN PRISON 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 sentenced today to 10 years in state prison for committing premium insurance fraud with his wife in one of the largest known Workers’ Compensation Insurance fraud cases in California’s history. Michael Vincent Petronella, also known as Michael Constantine, 51, was found guilty by a jury Feb. 11, 2010, of 33 felony counts of insurance fraud and the sentencing enhancement for aggravated white collar crime over $500,000 was found true. He was ordered by the court to pay $500,000 in restitution to the State Compensation Insurance Fund (SCIF).

 

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 Nov. 10, 2010, at 9:00 a.m. in Department C-55, 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 Pradas for prison garb.”

 

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 Employment Development Department (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 due to lower business costs resulting from insurance fraud. This also endangers injured employees who may be denied workers’ compensation benefits intended to meet their physical, psychological, and financial needs for a work-related injury.