Calif. Man Sentenced for Workers’ Comp Scheme

Five felony counts of insurance fraud, tax fraud and money laundering led to the sentencing of a San Mateo, Calif. man last week.

Laurence Bennett Guy, owner of Guy’s Roofing in Redwood City, received a one-year sentence, along with being placed on five years of supervised probation. Guy was also ordered to pay $800,000 in restitution to several insurance agencies, the California Department of Insurance (CDI) and the Employment Development Department (EDD). To date, Guy has paid just over $100,000 in restitution.

The sentencing resulted from a four and a half-year investigation and prosecution by CDI, EDD and the San Mateo County District Attorney’s Office.

According to investigators, Guy developed a cash pay scheme where he paid his workers in cash for all overtime hours and some straight time, thereby underreporting his payroll taxes and decreasing his workers’ compensation insurance premiums. In turn, this allowed Guy’s Roofing to underbid competing roofers in the Bay Area who were paying their share of taxes and insurance premiums as required by law.

Investigators further reported that a payroll document was uncovered noting the scheme when a search warrant was served on Guy’s Roofing in July of 1997. A check was given to an employee of Guy’s Roofing, which Guy alleged was a sub-contractor. The employee was then given a check with a list of what denominations of bills would be needed to pay the workers in cash. The check amount was always left under $10,000 in order to keep the bank from reporting the transaction to federal authorities. Once cashed, the money was returned to Guy’s roofing to be placed in envelopes for each employee and attached to their paycheck. The payment document also directed the bookkeeper to shred all evidence of cash payments following when the cash was distributed.

n expanding the scheme, Guy directed employees to create fictitious identifications with green cards and social security cards to allow employees to cash checks under assumed names. Employees were also told to make false certificates of workers’ compensation insurance coverage to be shown to insurance companies and tax auditors in furtherance of the insurance and tax fraud scheme.

Guy has been ordered to surrender to the San Mateo County Jail on Oct. 6, 2001 to begin a one-year sentence.

Topics California Workers' Compensation