Vocational School Owner Arraigned in $1M Workers’ Comp Fraud Case

Los Angeles area vocational school owner, Guillermo Frias, 65, of Paramount, and the school’s accounting manager, Yesid Colon, 54, of Baldwin Park, were arraigned following a California Department of Insurance investigation into allegations they submitted fraudulent claims to receive money from insurers for services the school did not provide.

They also allegedly received illegal kickback payments from counselors that paid for referrals of students, which is a labor code violation. Four counselors were also arraigned for their involvement in the illegal referrals and kickback scheme.

The investigation began after the CDI received referrals from multiple insurers alleging the vocational school, Caledonian, committed workers’ compensation fraud. The school was reportedly misusing Supplemental Job Displacement Benefit Vouchers, which provide injured workers with up to $6,000 for retraining at a post-secondary educational institution. The training helps the injured worker become more competitive in the job market when they are unable to return to their former vocation field due to being on total or temporary disability.

During the investigation, the department served a search warrant on Caledonian and seized evidence consistent with the speculation that the school was offering courses outside of which they were approved. The warrant also provided additional evidence that the school did not offer full instruction hours for courses, instructed students through third party vocational institutions, provided distance learning when not approved and instructed students in languages outside of the approved language.

Additionally, evidence reportedly found Caledonian paid vocational counselors and employees to refer students, which is also a labor code violation. Caledonian reportedly paid $496,147 to counselors for those illegal referrals. Accepting payment for referrals is also a violation and the evidence showed multiple vocational counselors accepted and received a total of $489,530 for their illegal referrals.

The investigation determined Caledonian was receiving money from insurance companies for the services not rendered. Further, counselors received illegal kickbacks payments from Caledonian for student referrals. The vocational counselors allegedly involved in the scheme are Jenny Villegas, Friends for Injured Workers CEO, Laura Wilson, CEO of Laura Wilsons and Associates, Jesus Garibay, Gordy’s Legal Service Director, and Hazel Ortega, CEO of Ortega Counseling Center. All six defendants were charged with violating Penal Code 550(a)(1), Labor Code 3215, and Insurance Code 750.5.

Frias, Colon, Villegas, Wilson, and Ortega were arraigned last week. Garibay was arraigned June 7. The defendants are scheduled to return to court on October 7.

The Los Angeles County District Attorney’s Office is prosecuting the case.

Topics Fraud Workers' Compensation K-12