Simi Valley roof company owner arraigned in $4 million workers’ comp fraud scheme
News: 2020 Press Release
VENTURA, Calif. — Judy Hein, 71, of Oxnard, was arraigned on five felony counts of insurance fraud after allegedly underreporting payroll for her Simi Valley roofing business by over $4 million, resulting in more than a $2 million loss to the State Compensation Insurance Fund (State Fund).
On December 19, 2018, the Department of Insurance received a referral from State Fund alleging that Hein's business, Cal Roofing, Inc., was underreporting payroll in order to receive a reduced rate for its workers' compensation insurance.
An investigation discovered internet searches that indicated the number of roofing projects and business revenue was not in line with Cal Roofing's stated number of employees or estimated annual premium. When wage information from the Employment Development Department (EDD) for Cal Roofing was compared to wage information in corresponding State Fund policy audits large discrepancies were revealed.
"Illegally underreporting payroll to your insurance company to save on business expenses is a crime,” said Insurance Commissioner Ricardo Lara. "The fraudulent actions of this business owner led to artificially inflated costs to insurance companies, businesses and consumers. Insurance fraud is not a victimless crime. We all pay a cost for these illegal actions.”
The investigation determined Hein was responsible for filing the fraudulent payroll reports with State Fund. She also signed EDD documents, which revealed the underreported payroll to State Fund, which she correctly reported to EDD.
The audit findings and payroll reports filed with State Fund show a payroll of $831,788 from 2013 through 2018. The payroll reports filed with EDD and bank records show a payroll of $4,948,114 for the same policy periods. Hein underreported Cal Roofing's payroll by $4,116,326 in order to obtain workers' compensation insurance at a reduced rate. The suspected fraud resulted in an estimated loss of $2,171,330 to State Fund in the form of unpaid insurance premiums.
Hein was arraigned on November 17, 2020, at the Ventura Superior Court. This case is being prosecuted by the Ventura County District Attorney's Office.
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Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation's largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are urged to call 1-800-927-4357 with any questions or contact us at www.insurance.ca.gov via webform or online chat. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.