Insurance Commissioner Dave Jones Announces Arrest Of Belmont Business Owners For Insurance Fraud
News: 2012 Press Release
Insurance Commissioner Dave Jones today announced that John Applegate, 48, and Camille Applegate, 50, the owners of Hallmark Roofing, Inc. have each been arrested on 24 felony counts for violating Insurance Code Section 11880 (a), Workers' Compensation Insurance Premium Fraud, and five felony counts each for violating the Unemployment Insurance Code Section 2117.5, failure to report employee wages. If convicted, both could face up to five years in state prison and restitution, which could exceed $1,000,000.
"Business owners who operate unfairly in the underground economy will be brought to justice," said Commissioner Jones. "I commend the excellent work of the investigators in this large scale case and in our ongoing efforts to bring fairness to the bidding process."
According to Investigators from the California Department of Insurance (CDI), Silicon Valley Regional Office, the Applegate's failed to accurately report their employee wages to their workers' compensation insurance company, State Compensation Insurance Fund (SCIF). CDI investigators served search warrants on Hallmark Roofing's bank accounts, business location, and the Applegate's residence. Based on the information and evidence obtained by the search warrants, CDI investigators conducted a forensic audit of the business. The forensic audit determined, by failing to report the business's employee wages accurately, Hallmark Roofing's owners avoided paying $629,391.10 in workers' compensation insurance premiums during the period of January 1, 2007 through December 31, 2011.
The investigation also revealed that in addition to the multiple felony counts of workers' compensation insurance premium fraud, Hallmark Roofing's owners also failed to report their employee wages to the Employment Development Department (EDD) during the period of January 1, 2010 through January 1, 2012 which, in turn, facilitated their evading paying payroll taxes to EDD. Hallmark Roofing's owners deducted the payroll taxes from their employee wages but failed to pay the taxes to EDD as required by law.
The workers' compensation insurance premium and payroll taxes unlawfully evaded by Hallmark Roofing's owners gave them an unfair business advantage which their competitors would not have had, allowing them to operate in the underground economy when bidding for job projects.
This case is being prosecuted by the San Mateo County District Attorney's Office.
The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $288 billion in premiums annually in California. Since 2011 the California Department of Insurance received more than 1,000,000 calls from consumers and helped recover over $394 million in claims and premiums. Please visit the Department of Insurance web site at www.insurance.ca.gov. Non-media inquiries should be directed to the Consumer Hotline at 800.927.HELP or 213.897.8921. Telecommunications Devices for the Deaf (TDD), please dial 800.482.4833.