San Jose security company owner sentenced in $3.4 million workers’ compensation fraud case
News: 2025 Press Release
SAN JOSE, Calif. — The owner of a San Jose-based security company, Raul Chavez, 40, was sentenced after a California Department of Insurance investigation uncovered a six year-long scheme to underreport payroll and avoid paying workers’ compensation insurance premiums.
Chavez pleaded guilty to felony premium fraud, sentenced to 180 days in county jail, two years of formal probation, and ordered to pay $225,168 in restitution to the State Compensation Insurance Fund (State Fund). Chavez has paid his restitution and served his jail time on electric monitoring.
“Premium fraud puts workers at risk and shifts the financial burden to honest employers who follow the law,” said Insurance Commissioner Ricardo Lara. “This case is a clear example of our commitment to protecting workers and holding those accountable who try to game the system. Thank you to the Santa Clara County District Attorney’s Office for their partnership and dedication in bringing this case to justice. ”
Chavez owned and operated Tactical Operations Protective Services, a limited liability company providing security guard, staffing, and patrol services in Santa Clara County. The Department received a suspected fraud referral in September 2023 from State Fund alleging Chavez failed to report an employee injury that occurred in June 2022. The referral further alleged Chavez had significantly underreported payroll for multiple security guards over a six-year period.
Although Chavez transported the injured worker to an emergency room on the date of the injury, he failed to notify State Fund or report the incident as required. The Department’s investigation revealed that from 2017 to 2022, Chavez had falsely claimed to State Fund that he had no employees or payroll. For the 2022 to 2023 policy year, he reported only $40,000 in payroll related to the injured employee.
However, the Department’s audit uncovered that Chavez concealed $3,431,903 in payroll from 2017 through 2023. This underreporting resulted in an estimated $205,565 in unpaid workers’ compensation premiums owed to State Fund.
The case was prosecuted by the Santa Clara 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.
