Workers’ Comp Fraud Task Force Uncovers $30M Scheme in California

A pair of businessmen were arraigned on multiple felony counts including insurance fraud, grand theft, and tax fraud after a California Department of Insurance investigation found they allegedly underreported over $29.2 million in payroll to illegally save on workers’ compensation insurance premium and taxes.

Ruben Perez Mireles Jr., 49, of Clovis, and his business associate, John Mena, 29, of Lemoore, operated two Kings County farm labor contracting companies, Vista Pacific Labor Solutions Inc. and Calzona Ag Management Inc.

The investigation by the Central Valley Workers’ Compensation Fraud Task Force reportedly found that Mireles, owner of Vista Pacific Labor Solutions, underreported $7.6 million in employee payroll to his workers’ comp carrier for the period of September 2019 through August 2020, resulting in a premium loss of $1.7 million.

The investigation reportedly revealed Mireles then created another farm labor contracting company, Calzona Ag Management Inc. Mireles recruited Mena and together they reportedly shifted payroll to this new company to avoid an increased assessment of the business’ workplace safety, which would have more than doubled the insurance premium. Together, they underreported $8.8 million in employee payroll for the period of December 2019 through December 2021, resulting in an additional premium loss of $1.8 million.

Additionally, the task force investigation found Mireles underreported $12.8 million in employee payroll to the Employment Development Department and failed to report personal income to the Franchise Tax Board. This underreporting resulted in a combined loss of roughly $3 million for unpaid tax liability, penalties, and interest. Mireles and Mena’s fraud scheme defrauded their insurance carries, EDD, and FTB out of over $6.5 million.

Investigators also discovered that Mireles fraudulently obtained a COVID-19 Paycheck Protection Program loan. After an investigation led by the FBI, Mireles pleaded guilty and was sentenced to one year in prison. Mireles was also in court on additional felony charges for his role in an earlier workers’ comp fraud scheme.

Mireles has been charged with eight felony counts including workers’ comp fraud, grand theft, unemployment insurance fraud and tax fraud. Mena has been charged with three felony counts of workers’ compensation insurance fraud and one felony count of grand theft.

The Central Valley Workers’ Compensation Fraud Task Force is an inter-agency anti-fraud partnership with members from the CDI, the California EDD, the California Franchise Tax Board, the Kings County District Attorney’s Office, the Fresno County District Attorney’s Office, the Kern County District Attorney’s Office, the Madera County District Attorney’s Office, the Merced County District Attorney’s Office, the San Luis Obispo County District Attorney’s Office, and the Tulare County District Attorney’s Office.

The case is being prosecuted by Kings County District Attorney Sarah Hacker.

Topics California Fraud Workers' Compensation