Grand jury issues indictments after Bakersfield vocational school allegedly steals benefits intended for injured workers
News: 2021 Press Release
BAKERSFIELD, Calif. — A California Department of Insurance investigation has led to the issuance and filing of indictments against seven defendants by the Kern County Grand Jury. The indictments were issued after the defendants allegedly stole over $330,000 in benefits meant to help injured workers re-enter the workforce.
The defendants were employees and owners of a Bakersfield vocational school, Instituto Hispano Americano (IHA), as well as employees of two local law offices. They allegedly misused Supplemental Job Displacement Benefit Vouchers, which provide injured workers with up to $6,000 for retraining at a post-secondary educational institution. The training helps the injured worker become more competitive in the job market when they are unable to return to their former employer due to being on total or temporary disability.
“By allegedly misusing benefits designed to help injured workers re-enter the workforce and be able to make a living, this business cheated workers, insurance companies and our state,” said Insurance Commissioner Ricardo Lara. “Workers' compensation vouchers are a vital program for retraining injured workers and the Department of Insurance will continue to protect it."
The Department’s investigation found the defendants conspired to defraud over 20 insurance companies out of more than $330,000. The defendants systematically sent false or misleading documentation to insurance carriers to prove the injured workers were eligible to obtain voucher money, but the students did not actually meet the minimum qualifications for the program. The defendants allegedly lied about dozens of test results for exams that were required for enrollment.
The investigation also found that injured workers were illegally directed to the school by employees of local law offices, who would be paid as much as $600 for each student they referred to the school.
“Like many types of programs that benefit the public at large, workers’ compensation laws can only help the people who need it most if they are protected from fraud and other schemes designed to misappropriate funds,” said Kern County District Attorney Cynthia Zimmer. “When evidence of abuse of the workers’ compensation system is identified, it will be investigated and prosecuted to hold wrongdoers accountable and ensure that benefits remain available for those genuinely qualified to receive them.”
Eighty-five charges have been filed against each defendant including conspiracy to commit insurance fraud, concealing facts affecting entitlement to insurance benefits, and offering or receiving money in exchange for referrals.
All seven defendants have been arraigned and are currently awaiting trial in the Kern County Superior Court. The defendants are Anna Ayala-Reyes, Sylvia Carrillo, Evelyn Cruz, Martin Cruz, Nelfido Rolando Cruz, Cynthia Ozaeta, and Sandra Paredez. The Kern 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.