News: 2010 Press Release
For Release: January 25, 2010
Media Calls Only: 916-492-3566
Insurance Commissioner Poizner Announces $20 Million in Restitution in Staffing Services Inc. Fraud Case
California Insurance Commissioner Steve Poizner today announced that Bellflower-based Staffing Services Inc. has been ordered by the Los Angeles County Superior Court to pay $20 million in restitution after a plea bargain was reached Jan. 15 in a workers' compensation insurance fraud case.
"Business owners have to realize that they have a moral and legal obligation to report the correct number and types of employees and then make sure they have adequate workers' compensation insurance for those employees," Commissioner Poizner said. "This is not a victimless crime. We all pay when a company chooses not to play by the rules as the rest of us."
Staffing Services Inc. is a temporary employment agency holding contracts for thousands of employees. The California Department of Insurance (CDI) launched an investigation into Staffing Services after the State Compensation Insurance Fund (State Fund) notified CDI of the suspected fraud. Following a two-and-a-half year CDI investigation, charges against Staffing Services were filed Nov. 26, 2008 alleging an attempt to defraud State Fund of more than $18 million in workers' compensation insurance premiums owed from 2002 to 2005. With penalties, the amount negotiated during the plea bargaining amounted to $20 million.
It was alleged that Staffing Services purposely misrepresented the types and number of employees in order to pay a smaller amount in premiums.
The Los Angeles County District Attorney's Office prosecuted the case.
Commissioner Poizner oversees 16 CDI Enforcement Branch regional offices throughout the state. Approximately 2,000 insurance fraud-related arrests have been made by the Department of Insurance's enforcement division since Commissioner Poizner took office in 2007 - more arrests than have been made during any other two year period, under any previous insurance commissioner.
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