According to a report from the Insurance Journal, Adan Deniz, a contractor from Los Angeles County, has been arrested and charged with nearly two dozen counts of workers’ compensation fraud. Mr. Deniz is alleged to have intentionally underreported his company’s payroll by several hundreds of thousands of dollars, thereby bilking the state’s insurance fund out of more than $50,000.00. Additionally, he stands accused of creating fraudulent workers’ compensation coverage documents and records. In this article, our Bakersfield workers’ compensation defense attorneys explain what we know about the fraud allegations.
On April 8, 2022, Adan Deniz was arraigned on several workers’ compensation fraud charges in a court in Los Angeles County. Among other charges, Mr. Deniz was arraigned for workers’ compensation fraud, forgery, and theft. According to the allegations, Mr. Deniz failed to report his company’s actual payroll—underreporting the amount by more than $425,000.00 over a 27-month period. In doing so, he defrauded his insurer—the California State Compensation Insurance Fund—out of $52,269.00 in workers’ compensation premiums that were due.
State insurance regulators and local prosecutors allege that Mr. Deniz knowingly tried to conceal the workers’ compensation fraud by creating fraudulent certificates of workers’ compensation coverage. The contracting company, which worked in plumbing, was able to undercut competitors and secure some lucrative projects. Officials continue to crack down on workers’ compensation fraud. As noted by California Department of Insurance Commissioner Ricardo Lara, “committed to investigating insurance fraud to protect Californians and level the playing field for hardworking business owners.”
Failure to Properly Report Payroll is Unlawful in California
Under California state law, all employers are required to obtain and maintain workers’ compensation insurance coverage for their employees. Workers’ compensation insurance premiums are determined, in large part, based on a company’s payroll. As such, all businesses and organizations in California have a legal duty to properly report their payroll to their private insurance carrier or the California State Compensation Insurance Fund. Payroll fraud remains one of the most common types of workers’ compensation fraud schemes perpetrated by employers.
It is important to emphasize that workers’ compensation fraud committed by underreporting payroll is both a criminal and civil offense. Business owners that knowingly fail to report their true extent of their companies’ payroll over any given period of time are paying less in premiums than they actually owe. This has real adverse effects for all other parties as it drives up the total cost of workers’ compensation coverage in California.
At Yrulegui & Roberts, our Bakersfield workers’ compensation defense attorney is a dedicated and forward-thinking advocate for clients. Our law firm works with employers, claims administrators, and insurers across a wide range of matters. If you have questions about workers’ compensation fraud, we can help. Contact us today for a completely confidential case review. We provide workers’ compensation defense representation in Bakersfield, Kern County, and throughout the whole region.