According to CDI investigators, Bell Building Maintenance Company, through Chan and Kim, purposefully misrepresented the number of employees working for the janitorial company so as to reduce the proper rate of workers' compensation insurance premium.

The payroll reports that Kim submitted to the State Fund from 2000 to 20005 indicated that the company employed just two people: Kim and his wife. As a result, the company was only required to pay the minimum amount of premium to receive a workers' compensation insurance policy during this period. However, the investigation revealed that, in reality, Bell Building Maintenance Company was a much larger operation. Bell actually employed hundreds of janitors servicing numerous private companies and public entities in Los Angeles, Ventura, Orange, San Bernardino, and Riverside counties. Further investigation revealed that Chan, who is not Kim's wife, acted as the company's corporate president during this time period.

A State Fund audit of documents seized by CDI personnel in October of 2006 determined that Bell intentionally underpaid premiums from 1998 through 2006 in the amount of $4,466,936.52. In addition, a subsequent audit conducted by the California Employment Development Department revealed that Chan failed to accurately report employee wages and/or wage payments from April 2001 through December 2006. This appears to have resulted in underpaying payroll, unemployment insurance, and state disability insurance taxes in the amount of $1,889,580.15.

Kim has been formally charged with one count of criminal conspiracy; ten counts of presentation of false/fraudulent writing to public entity; one count of misrepresentation to obtain a lower rate with State Fund; and, one count of misrepresentation to obtain a lower rate with a carrier other than State Fund - all felonies. His bail has been set at $3.28 million.

Chan faces one count of criminal conspiracy; ten counts of presentation of false/fraudulent writing to public entity; one count of misrepresentation to obtain a lower rate with State Fund; one count of misrepresentation to obtain a lower rate with a carrier other than State Fund; one count of failure to pay tax; one count of false tax return; one count of failure to make contributions; and, one count of failure to make contributions to the Disability Fund - all felonies. Her bail has been set at $3.3 million.

The Los Angeles County District Attorney's Office is prosecuting the case. The California State Compensation Fund and Employment Development Department (EDD) assisted in the investigation.

Special Reports /

Fraud of the Week: Custodial Company Forced To Clean Up Act

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