Skip to Main Content
Contact Us Search
CA Department of Insurance
CA Department of Insurance
CA Department of Insurance

Insurance Commissioner Dave Jones Announces Arrest Of Belmont Business Owners For Insurance Fraud

News: 2012 Press Release

For Release: April 23, 2012
Media Calls Only: 916-492-3566
Email Inquiries:

Insurance Commissioner Dave Jones Announces Arrest Of Belmont Business Owners For Insurance Fraud
Co-owners of roofing business charged with 29 felonies

Insurance Commissioner Dave Jones today announced that John Applegate, 48, and Camille Applegate, 50, the owners of Hallmark Roofing, Inc. have each been arrested on 24 felony counts for violating Insurance Code Section 11880 (a), Workers' Compensation Insurance Premium Fraud, and five felony counts each for violating the Unemployment Insurance Code Section 2117.5, failure to report employee wages. If convicted, both could face up to five years in state prison and restitution, which could exceed $1,000,000.

"Business owners who operate unfairly in the underground economy will be brought to justice," said Commissioner Jones. "I commend the excellent work of the investigators in this large scale case and in our ongoing efforts to bring fairness to the bidding process."

According to Investigators from the California Department of Insurance (CDI), Silicon Valley Regional Office, the Applegate's failed to accurately report their employee wages to their workers' compensation insurance company, State Compensation Insurance Fund (SCIF). CDI investigators served search warrants on Hallmark Roofing's bank accounts, business location, and the Applegate's residence. Based on the information and evidence obtained by the search warrants, CDI investigators conducted a forensic audit of the business. The forensic audit determined, by failing to report the business's employee wages accurately, Hallmark Roofing's owners avoided paying $629,391.10 in workers' compensation insurance premiums during the period of January 1, 2007 through December 31, 2011.

The investigation also revealed that in addition to the multiple felony counts of workers' compensation insurance premium fraud, Hallmark Roofing's owners also failed to report their employee wages to the Employment Development Department (EDD) during the period of January 1, 2010 through January 1, 2012 which, in turn, facilitated their evading paying payroll taxes to EDD. Hallmark Roofing's owners deducted the payroll taxes from their employee wages but failed to pay the taxes to EDD as required by law.

The workers' compensation insurance premium and payroll taxes unlawfully evaded by Hallmark Roofing's owners gave them an unfair business advantage which their competitors would not have had, allowing them to operate in the underground economy when bidding for job projects.

This case is being prosecuted by the San Mateo County District Attorney's Office.

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 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.

Google Translate