California Department of Insurance investigation leads to conviction of family for workers' compensation insurance fraud
News: 2013 Press Release
SANTA CRUZ, Calif. - Jeffrey Thranow, 59, owner of Costa Bella Builders was convicted of committing workers' compensation insurance premium fraud for his part in failing to report employees to his insurance carrier or to the Employment Development Department (EDD). Thranow's son-in-law, Vittorio Castelli, 34, was also convicted of felony insurance fraud, while Thranow's daughter, Kathleen Castelli, 34, was convicted of misdemeanor insurance fraud.
"Fraud is a multi-billion dollar enterprise, which artificially inflates costs to insurers, consumers, and California's taxpayers," said Commissioner Dave Jones. "Thranow cheated both his workers' compensation insurer and the State of California out of nearly $100,000, and by doing so passed the cost of his fraud onto consumers across the state. Through a collaborative effort between my department and the Santa Cruz District Attorney's Office, we have brought another non-compliant contractor to justice."
The Department of Insurance in a joint effort with the Santa Cruz County District Attorney's Office began an investigation in November 2011 into Costa Bella Builder, in response to an employee injury. Thranow, a licensed contractor operating in Aptos, paid employees in cash in an attempt to avoid paying workers' compensation insurance. The investigation uncovered evidence that Thranow along with his daughter and son-in-law colluded to convince employees to accept these cash payroll payments. A Costa Bella employee was injured during this time and required surgery. Thranow dissuaded this employee from filing a workers' compensation claim and instead offered him a State Disability Form with instructions to claim the injury occurred while the employee was home.
Costa Bella Builders was ordered to pay over $47,000 in premium restitution, nearly $30,000 in back taxes to EDD, and pay $37,000 in restitution related to the injured workers claim.
- Jeffrey Thranow was sentenced to one year of jail.
- Vittorio Castelli was sentenced to six months of jail.
- Kathleen Castelli was sentenced to one year of probation.
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.