California Roofer Arrested For Workers’ Comp Fraud, $50K Loss to Insurer

October 21, 2019

Herbert Allen Kelly III, 65, of Rancho Murieta, Calif., owner of Kelly Roofing Co., has been arrested on six felony counts of workers’ compensation fraud after allegedly underreporting his business’ payroll and number of employees resulting in a loss to his insurer of $50,000.

On Jan. 12, 2015, while employed with Kelly Roofing Co., a worker slipped and fell from a roof at a jobsite. As a result of the employee’s injuries, a workers’ compensation claim was opened with Kelly’s insurer, State Compensation Insurance Fund, and to date SCIF has paid roughly $730,175 in medical and disability payments.

Following the incident, Cal/OSHA conducted an inspection of the jobsite with Kelly who reportedly advised he had three employees. SCIF conducted audits of Kelly Roofing Co. on a yearly basis to verify premium and payroll.

Herbert Kelly

Kelly allegedly reported $31,685 in payroll for the December 2012 to December 2013 policy period, yet reported $0 in payroll and no employees for the remainder of the policy period from 2014 through 2018.

During the SCIF audit for policy period 2015, when the accident occurred, Kelly reported he had no employees. However, SCIF noted Kelly Roofing Co. had a workers’ comp claim in January 2015. Kelly alleged he only paid the injured worker $500 for a single day of work and did not have any payroll records for him.

California Department of Insurance detectives served search warrants on both Kelly and Kelly Roofing Co.’s bank accounts and conducted an audit of bank records.

Detectives reportedly discovered $89,781 in total audited payroll with up to 15 possible employees. The department confirmed Kelly Roofing Co. had employees during the period when Kelly claimed he had no employees and no payroll. The audited payroll was ultimately forwarded to SCIF who determined Kelly Roofing Co. owed $50,000 in unpaid past premiums.

This case is being prosecuted by the Sacramento County District Attorney’s Office.

Was this article valuable?

Here are more articles you may enjoy.