Owners of Hotel Cleaning Firm in California Charged with $7M Workers’ Comp Fraud

The owners of a janitorial company serving luxury hotels in Southern California and Nevada are charged with running a $7 million workers’ compensation insurance and tax evasion scam, prosecutors announced Monday.

Hyok “Steven” Kwon and Woo “Stephanie” Kwon were arrested late last week and remained jailed with bail set at $1 million each, according to the San Diego County district attorney’s office.

Hyok Kwon pleaded not guilty Monday. His wife’s arraignment was pending.

The couple own Irvine-based Good Neighbor Services. Prosecutors say they concealed the existence of at least 800 employees to avoid paying millions in payroll taxes and workers’ compensation insurance.

“These defendants lied on the backs of their employees, who were cleaning rooms in some of the most prestigious hotels in California,” San Diego County District Attorney Bonnie Dumanis said. “If employees got hurt on the job, they were threatened with being fired.”

“The Kwons treated their workers like chattel when they fraudulently did not provide workers’ compensation insurance coverage for their workers,” state Insurance Commissioner Dave Jones said.

The company’s website says its clients include the Westin, Hyatt, Hilton, Ritz-Carlton, Four Seasons, Omni, Marriott and Sheraton hotel chains, and other hotels including the MGM Grand in Las Vegas.

The website says the company has offices in San Francisco, Santa Barbara, Los Angeles, Orange County, San Diego, Las Vegas and Atlanta.

The indictment handed down Thursday only covers Southern California hotels, including the Omni La Costa Resort & Spa in Carlsbad and the landmark Hotel del Coronado in Coronado.

The Kwons are charged with insurance fraud, tax evasion and extortion. They each face up to 31 years in prison if convicted.

Six other people also have been charged in the alleged scheme.

Topics California Fraud Workers' Compensation