Central Valley farm labor contractor convicted in $5.4 million underground economy case
News: 2016 Press Release
HANFORD, Calif. — Michael Harold Kreger, 63, of Visalia, owner of Michael Kreger Contracting, was sentenced in California Superior Court in Kings County after his conviction on three felony counts of insurance fraud with a white collar crime enhancement charge for cheating his workers' compensation insurer out of more than $5.4 million in premiums.
"Employers operating in the underground economy cheat their employees, their insurer, and create an unfair competitive advantage," said Insurance Commissioner Dave Jones. "I am committed to putting a stop to the underground economy and leveling the playing field for legitimate businesses that play by the rules."
After receiving a referral from Kreger's workers' compensation insurer, detectives from the California Department of Insurance launched an investigation into Kreger's business practices. The investigation included an audit of Kreger's payroll records provided to his insurer and what he provided to the Employment Development Department, which revealed that for over four years Kreger intentionally underreported his payroll in order to mislead his workers' compensation insurer and obtain artificially low workers' compensation insurance premiums.
"This case is a clear example of Kings County's prosecution team standing up for every business owner and employee who is affected by fraudulent business practices that manipulate the system and seek financial gain at the expense of injured employees and upstanding business owner. I am proud of the contribution and work done by all the investigation teams, especially Deputy District Attorney Michael Casaus, Senior Investigator Nicole Lucero, and Legal Secretary Lynn Rikard on behalf of our office." said Kings County District Attorney Keith Fagundes.
The Kings County District Attorney successfully prosecuted this case, leading to Kreger's conviction and sentencing of 270 days (9 months) in jail, five years probation, 1500 hours of community service, and ordered restitution exceeding $5.4 million.
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Kreger was convicted on 3 felony counts of Insurance Code 11880 (a)- making a false or fraudulent statement to determine the premium, rate, or cost of any workers' compensation insurance policy; and Penal Code 186.11 - a white collar crime enhancement for fraud exceeding $100K.
The California Department of Insurance, established in 1868, is the largest consumer protection agency in California. Insurers collect $289 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.