Fraud Roundup

November 6, 2006

CEO and wife arrested for alleged
workers’ comp fraud

Three suspects in connection with a workers’ compensation premium fraud investigation conducted by the California Department of Insurance (CDI) Fraud Division have been arrested.

A felony complaint was issued by the Los Angeles County District Attorney’s Office charging Gad Leshem with four counts of premium fraud and one count of conspiracy. A felony complaint also was filed against Zeev Golan and Irit Golan, charging both with four counts each of premium fraud and one count of conspiracy. Bail for each of the defendants was set at $6.5 million dollars. If convicted, the defendants could be sentenced to a $50,000 fine or double the amount of the fraud and up to five years in state prison.

Gad Leshem is the president/CEO of Cover-All Inc., a flooring and carpet installation company based in Chatsworth, Calif. Zeev Golan is the vice president and his wife, Irit Golan, is employed as the executive secretary and payroll supervisor.

According to CDI, Cover-All obtained a workers’ compensation policy from State Compensation Insurance Fund on Sept. 1, 2001. SCIF conducts routine audits of policyholders. The audits revealed that the payroll reported to SCIF was significantly lower than that reported to the Employment Development Department. As a result, SCIF referred the case to the CDI Fraud Division.

During the course of the investigation, it was learned that Zeev and Irit Golan were responsible for preparing the alleged fraudulent monthly payroll reports provided to SCIF, CDI stated. The monthly payroll reports were reviewed and approved by President Gad Leshem. Leshem and Zeev Golan also provided the alleged fraudulent payroll documents that were provided to SCIF during the routine audits. The investigation conducted by the CDI Fraud Division determined that from Sept. 1, 2001 to April 16, 2005, Cover-All underreported payroll of $26.9 million to SCIF. This underreported payroll resulted in a premium loss of $7.5 million, CDI said. SCIF also assisted in the investigation.

Four arrested for alleged $39 million workers’ comp fraud
Four suspects who allegedly committed more than $39.2 million worth of workers’ compensation premium fraud against three insurance companies have been arrested in California.

After a nearly four-year investigation conducted by the Department of Insurance’s (CDI) Fraud Division, investigators served arrest warrants against Luis Perez of Dove Canyon, Calif.; Paul Rodas of Costa Mesa, Calif.; Elizabeth Waldo (aka: Elizabeth Middleton) and Oscar Hidalgo, both of Yorba Linda, Calif. An arrest warrant is still outstanding for Javier Chavolla, also of Yorba Linda. The suspects were either owners or principal employees of temporary employment agencies known as Checkmate Staffing Inc.; Checkmate Staffing West Inc.; Checkmate Transport Inc; Tower Temps Inc.; Staffaide Inc.; RPM Staff Leasing; and Tower Staffing Inc.

Perez and Rodas were arrested at their place of employment in Foothill Ranch, Calif. Waldo was arrested at her residence by the Chino Hills Police Department, and Hidalgo was arrested at his place of employment in Orange, Calif.

Each of the four suspects has been charged with one count of conspiracy to commit workers’ compensation insurance fraud and one count of conspiracy to commit denial of workers’ compensation insurance benefits. If convicted, they could face up to 10 years in prison. Perez was booked into Orange County jail with bail set at $10 million. Waldo was booked into West Valley Detention Center Jail on $500,000 bail. Hidalgo was booked into Orange County jail on $500,000 bail, and Rodas was booked into Orange County jail on $250,000 bail.

The suspects were all owners or employees who are alleged to have fraudulently underreported and/or misclassified employees to several insurance companies, including State Compensation Insurance Fund, Zurich American Insurance Co., and Redland Insurance Co. The suspects’ companies were neither licensed insurers nor were they bonded and able to act as a third-party administrator, according to CDI.

The San Bernardino County District Attorney’s office is prosecuting the case, and additional arrests are expected.

If anyone has information regarding Chavolla or other aspects of this case, contact the CDI Fraud Division’s regional office in Rancho Cucamonga at 909-919-2200, or a local law enforcement agency.

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