A Wildomar man convicted in what may be the largest workers’ compensation premium fraud case is scheduled Friday to be sentenced.
of three counts of workers’ compensation fraud and one count each of tax fraud and perjury, according to Riverside County District Attorney’s Office spokesman John Hall. The jury also found him guilty of a special enhancement of taking in excess of $500,000, Hall said.
Morales now faces up to 18 years in state prison.
The DA’s office is also asking the judge in the case to order Morales to pay $3.1 million in restitution.
Morales’ son, Brian Todd Morales, also of Wildomar, pleaded guilty in the same case in January 2010 to the three workers’ compensation fraud counts and one tax fraud count; he was sentenced in April 2010 to four years in prison and ordered to pay $3.1 million in restitution, Hall said.
The case was the result of a 13-month investigation by the Riverside County DA’s Bureau of Investigation in a partnership with the state Employment Development Department and special investigation units of the victimized insurance company.
In 2008, state EDD became aware of possible fraud involving companies owned and operated by the Morales’, according to Hall. The men formed and used various names for their businesses, such as Shelby Framing and Shelby Development, in order to hide payroll and to keep from paying workers’ compensation premiums, but it always primarily was Shelby Framing, Hall said.
The investigation determined the Morales’ had been cheating more than 400 employees out of insurance premiums for unemployment insurance from 2005 through 2008, Hall continued. The defendants had not been reporting worker injuries while also underreporting the number of employees, or even reporting no employees, in the various company names.
According to Hall, approximate monetary losses in the case were as follows:
--$1.7 million to the State Compensation Insurance Fund
--$1 million to the state Employment Development Department
--$300,000 to Granite State Insurance Company