A licensed general contractor and owner of a Marin County, Calif., roofing company has pled guilty to workers’ compensation insurance premium fraud, unemployment insurance fraud and filing false income tax returns — potentially costing up to $1.4 million in combined losses.
An 18-month multi-agency state investigation revealed that Kenneth Scott Cooper, 50, of San Rafael, Calif., failed to accurately report his employee payroll at Ken Cooper Roofing and Gutter Systems of Marin County from 1999-2003. Cooper pled guilty to the charges on Tuesday in Marin County. The investigation included the California Department of Insurance (CDI), State Compensation Insurance Fund (SCIF), Franchise Tax Board (FTB), Employment Development Department (EDD) and the Marin County District Attorney’s Office, which filed charges against Cooper on May 10.
“California law requires all employers to carry workers’ compensation insurance coverage and to accurately report payroll and state taxes for the protection of their employees,” said Insurance Commissioner John Garamendi. “Cooper misclassified his employees, which not only put them at great risk, but also put other businesses at a disadvantage.”
A multi-agency audit for the period Jan. 1, 1999 through Nov. 7, 2003, revealed that Cooper intentionally underreported his payroll to SCIF for the purpose of obtaining workers’ compensation insurance at less than the appropriate rates. The audit determined that Cooper owes SCIF approximately $550,000 in premiums. Additionally, the investigation revealed that Cooper was paying some of his employees a lower hourly wage than he reported to SCIF, artificially reducing his premiums. He also paid a portion of his employees’ payroll in cash, enabling him to understate the total payroll he paid his employees to both SCIF and EDD. This saved him a significant amount in his annual premiums and employment taxes.
According to investigators, Cooper owes EDD more than $308,000 in taxes, penalties and interest. FTB also conducted an investigation into Cooper’s state income tax returns and determined that he filed false returns for the years 1999 through 2003 and will owe FTB approximately $485,000 in taxes, tax penalties and interest. Cooper pled guilty to violating Section 11880(a) of the California Insurance Code, Section 2119 of the California Unemployment Insurance Code, and Section 19705 of the California Revenue and Taxation Code. Cooper will be formally sentenced and full restitution determined in the Marin County Superior Court on Jan. 13, 2006.
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