A Calif. businesswoman surrendered to police after underreporting her company's payroll to Redwood Fire & Casualty Insurance Company (Redwood), where she had purchased workers' compensation insurance.
Teresa Reif, 31, is the owner of Genesis Building Services, Inc., which operates a janitorial and pest control company in the Bay Area. In 2008, Redwood allegedly received conflicting statements from Genesis in regards to the number of employees the company had.
As it turns out, Genesis had misrepresented about $544,440 in employee payroll, and Redwood referred the suspected fraud to the California Department of Insurance (CDI). The truth was that Genesis employed more than 140 staffers, and yet only reported less than half of them to insurance carriers.
An investigation by the CDI Fraud Division discovered that from 2005 to 2009, when Genesis had purchased workers' compensation insurance from Redwood, the company allegedly underreported $10,567,776.69 in payroll. In doing so, Reif avoided paying $2,957,089.20 in an insurance premium.
The only compensation Reif will be receiving for her intricate, yet fraudulent work is hard time. The case is currently being prosecuted in the San Mateo County District Attorney's Office, and she faces a $50,000 fine and/or up to 5 years in prison.
Source: www.insurance.ca.gov
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