Merced family members arraigned in $2.1 million insurance fraud schemes
News: 2023 Press Release
Angelita Barocio-Negrete was sentenced to five counts of insurance fraud and to six years in custody and three years of mandatory supervision. Her sentence with run concurrent to her previous sentencing. Albaro Barocio was sentenced to one count of insurance fraud and to serve two years in custody and one year mandatory supervision. Melissa Bourbois and Maria Negrete-Melchor were each sentenced to four counts insurance fraud and to serve four years in custody and two years mandatory supervision. Restitution has been ordered in the combined amount of $2,165,308.
MERCED, Calif. – Following a Department of Insurance investigation, four Merced family members were arraigned this week for multiple counts of insurance fraud. The investigation revealed the businesses owned and/or operated by these residents had allegedly underreported payroll by millions of dollars, leading to an illegal underpayment of over $2.1 million in workers' compensation insurance premiums.
This alleged fraud was discovered after a previous Department of Insurance investigation which resulted in the sentencing of a father and daughter for a similar underreporting scheme. The daughter in that investigation, Angelita Barocio-Negrete, was also the office manager and bookkeeper for two additional family-owned farm labor contracting businesses in Merced County. An investigation into these businesses revealed they too allegedly underreported payroll to their insurance carrier.
Between December 2007 and January 2013, Negrete M. Agriculture Inc., owned by Maria Negrete-Melchor, 55, and her daughter-in-law Melissa Bourbois, 39, had a workers’ compensation insurance policy issued by State Compensation Insurance Fund. Maria’s daughter, Angelita Barocio-Negrete, 36, was the office manager and bookkeeper. During this time, they reported $552,517 in payroll to State Fund. A forensic audit revealed Negrete M. Agriculture Inc. actually had $4,026,125 in payroll, resulting in an underreporting of $3,473,608.
Between November 2012 and November 2015, Negrete & Son’s Ag Inc., owned by Albaro Barocio, 39, had a workers’ compensation insurance policy also issued by State Compensation Insurance Fund. Albaro’s sister, Angelita Barocio-Negrete, was the office manager and bookkeeper. During this time, the insured reported $654,091 in payroll to State Fund. A forensic audit revealed Negrete & Son’s Ag Inc. actually had $4,679,409 in payroll, resulting in an underreporting of $4,025,317.
The underreporting by both companies resulted in a loss of $2,165,308 in premium by State Fund.
Underreporting of workers' compensation insurance in California is illegal and undermines the financial stability of the insurance system, which shifts costs onto other policyholders. It also jeopardizes the availability of benefits for injured workers, hindering their access to necessary support. Unfair competition also arises as fraudulent businesses gain an advantage over ethical ones.
These consequences destabilize the insurance system, compromise benefits for injured workers, and create an unfair business environment, ultimately harming consumers in terms of higher costs, limited access to support, and reduced economic stability. Experts at the Department of Insurance are dedicated to protecting consumers by rigorously investigating cases of alleged illegal acts by insurance companies and individuals.
All four family members were arraigned on April 25, 2023. They are scheduled to return to court on August 1, 2023. The Merced County District Attorney’s Office is prosecuting this case.
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.