Four Merced, California, family members were arraigned this week for multiple counts of insurance fraud after a California Department of Insurance investigation revealed the businesses owned and operated by the residents allegedly underreported payroll by millions of dollars.
The underreporting leading to an illegal underpayment of over $2.1 million in workers’ compensation insurance premiums, according to the CDI.
The alleged fraud was discovered after a previous CDI investigation, which resulted in the sentencing of a father and daughter for a similar underreporting scheme. The daughter in that investigation, Angelita Barocio-Negrete, was also the office manager and bookkeeper for two additional family-owned farm labor contracting businesses in Merced County. An investigation into these businesses revealed they too allegedly underreported payroll to their insurance carrier.
Between December 2007 and January 2013, Negrete M. Agriculture Inc., owned by Maria Negrete-Melchor, 55, and her daughter-in-law Melissa Bourbois, 39, had a workers’ comp policy issued by State Compensation Insurance Fund. Maria’s daughter, Angelita Barocio-Negrete, 36, was the office manager and bookkeeper. During this time, they reported $552,517 in payroll to State Fund. A forensic audit revealed Negrete M. Agriculture Inc. actually had $4,026,125 in payroll, resulting in an underreporting of $3,473,608, according to the CDI>
Between November 2012 and November 2015, Negrete & Son’s Ag Inc., owned by Albaro Barocio, 39, had a workers’ comp policy also issued by State Compensation Insurance Fund. Albaro’s sister, Angelita Barocio-Negrete, was the office manager and bookkeeper. During this time, the insured reported $654,091 in payroll to State Fund. A forensic audit revealed Negrete & Son’s Ag Inc. actually had $4,679,409 in payroll, resulting in an underreporting of $4,025,317, according to the CDI.
The underreporting by both companies resulted in a loss of $2,165,308 in premium by State Fund.
All four family members were arraigned on April 25. They are scheduled to return to court on Aug. 1.
The Merced County District Attorney’s Office is prosecuting the case.
Topics California Fraud
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