Car wash owners arraigned in $3.6 million workers’ compensation fraud scheme
News: 2021 Press Release
FRESNO, Calif. — Behzad Bandari, 64, of Pacific Palisades, and Sam Siam, 67, of Thousand Oaks, appeared in a Tulare County Superior Court today, answering to nine counts each of felony insurance fraud after allegedly underreporting more than $3.6 million in employee payroll as a part of a scheme to fraudulently reduce their company’s workers’ compensation insurance premium by $369,210.
“Workers’ compensation fraud can lead to higher insurance premiums for employers who follow the rules and may ultimately hurt workers who are legitimately injured on the job,” said Insurance Commissioner Ricardo Lara. “The California Department of Insurance is committed to rooting out fraud and protecting consumers. I am proud of the work our staff does to bring alleged perpetrators to justice.”
Bandari was the Chief Financial Officer of Waterdrops Express Car Wash and Siam was the company’s Chief Executive Officer. They were identified as shareholders and managing partners in a chain of car washes operated from their corporate office in Woodland Hills. The car wash locations spanned across three counties, Tulare, Kings, and Ventura, and were organized under multiple corporate entities. Bandari is additionally, a Certified Public Accountant and managed the taxes on behalf of the various corporations and LLCs, doing business as Waterdrops Express Car Wash.
On March 25, 2020, the California Department of Insurance began an investigation after receiving a tip from an insurance company. The tip alleged Bandari and Siam manipulated employee payroll records to reduce the premium amounts owed to their insurance company, thereby committing insurance fraud.
Department detectives uncovered Bandari and Siam underreported employee payroll to two separate insurance companies. The underreporting occurred when Bandari and Siam provided false payroll records during routine audits with the insurance companies for policy years 2014 through 2016.
A discrepancy of more than $3.6 million was discovered when detectives compared employee payroll records submitted to the insurance companies, against the employee wages reported to the Employment Development Department during the same policy years. By underreporting the payroll to their insurance companies, Waterdrops Express Car Wash avoided paying $369,210 in premiums owed to the two insurance companies.
Under state law, employers are required to maintain workers’ compensation insurance to cover their employees in the event of an accidental on-the-job injury. To ensure proper coverage, employers are required to accurately report the number of employees, job classifications, and the amount of payroll expended. One of the common ways in which employers avoid paying higher insurance premiums is to underreport a business’s payroll by providing false payroll reports to their insurance company.
Based on estimates by the National Insurance Crime Bureau (NICB), workers' compensation fraud is more than $30 billion annually in the United States. In California, it’s estimated workers' compensation fraud may cost the state between $1 billion to $3 billion per year.
Bandari and Siam are scheduled to appear in court again on December 12, 2021. The Tulare County District Attorney’s Office is prosecuting this case.
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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.