The owner of a San Jose-based security company was sentenced after a California Department of Insurance investigation reportedly uncovered a multiyear scheme to underreport payroll and avoid paying workers’ compensation insurance premiums.
Raul Chavez, 40, pleaded guilty to felony premium fraud and was sentenced to 180 days in county jail, two years of formal probation and ordered to pay $225,168 in restitution to the State Compensation Insurance Fund.
Chavez owned and operated Tactical Operations Protective Services, a limited liability company providing security guard, staffing and patrol services in Santa Clara County.
The CDI reportedly received a suspected fraud referral in September 2023 from State Fund alleging Chavez failed to report an employee injury that occurred in June 2022. The referral further alleged Chavez had underreported payroll for multiple security guards over a six-year period.
Chavez transported the injured worker to an emergency room on the date of the injury, but he failed to notify State Fund or report the incident as required, according to the CDI’S investigation. The investigation showed that from 2017 to 2022, Chavez falsely claimed to State Fund that he had no employees or payroll. For the 2022 to 2023 policy year, he reported $40,000 in payroll related to the injured employee.
However, the CDI’s audit showed that Chavez concealed $3,431,903 in payroll from 2017 through 2023. This underreporting resulted in an estimated $205,565 in unpaid workers’ comp premiums owed to State Fund.
The case was prosecuted by the Santa Clara County District Attorney’s Office. Chavez paid his restitution and served his jail time on electric monitoring, according to the CDI.
Topics
California
Fraud
Workers’ Compensation
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