ORANGE COUNTY
DISTRICT ATTORNEY’S OFFICE
PUBLIC WORKS UNIT
Building a Criminal Case
For Prosecution of
OCDA PUBLIC WORKS UNIT
The District Attorney’s Office created a new Public
Works / Prevailing Wage Violation Unit within our
Workers Compensation Insurance Unit in June 2011.
This unit was created in response to contractors
underpaying their employees prevailing wages, low
bidding on Public Works contracts and the unlawful
disregard for the laws governing public works.
GUIDELINES FOR FILING A CASE
WITH THE OCDA
Project in Orange County or Contractor’s Office in Orange County Synopsis of the Case Interviews and/or Employee Questionnaires Recordings, Documents, Checks, and any Evidence Given to you by Employee Prevailing Wage Determination for Time Periods Investigated Any documents you have obtained
from Awarding Body or Contractor
DOCUMENTS REQUESTED
Copies of all NONREDACTED certified payroll records from ALL contractors on the project. We are requesting payroll records from Start to Finish or Date
Bid Proposal, original bid documents, bid application, Contractors Bid, Bid Summary (Showing contractors who bid on the projects, breakdown of the contractors’ bids, and bid spread between each contractor’s Total Bid)
Workers Compensation Policy (Do you have the actual policy or did you rely on the CSLB License information)
Contract between the Awarding Body/General Contractor and the Suspect Contractor. (Does the contract contain Prevailing Wage Agreement or is this a separate document)
DOCUMENTS REQUESTED
Pre-construction logs and notes
Inspector Logs (These can be a goldmine!)
Fringe benefit statement to verify that benefits were paid (PW 26)
Wages and civil assessments against contractor (Did you check with DIR or other agencies to see if the contractor had previous violations) Interviews or questionnaires with workers
Division of Apprenticeship Standards form (PWC 100) Photographs
BUILDING A CASE
Preliminary Report (CCC, Unions, DIR, Other) Insurance
Employment Development Department (EDD)
Department of Industrial Relations – Division of Labor Standards Contractor State License Board (CSLB)
Interview workers Corporate Documents
Documents from Awarding Body or General Contractor Search Warrant for Contractor’s office
BUILDING A CASE
Search Warrant (Probable Cause to believe that a search will yield evidence related to a crime)
Looking for employee files, evidence of true employee wages, timesheets, certified payrolls, receipts, bank account information, computers, etc.
Evidence Review
Regional Computer Forensics Lab Filing the case
COMMON VIOLATIONS
• Show less hours on CPR’s to match prevailing wage – Falsifying documents (Violation Penal Code 115)
• Did you keep a calendar? • Did you fill out a timecard? • Did you sign a log?
• Who kept track of the hours on the jobsite ?
• How many days a week do you work (which days)? • What are your hours?
• How much were you paid?
• Don’t show workers on Certified Payroll Records (If they don’t exist I don’t have to claim them)
• Do you know the names of your co-workers?
COMMON VIOLATIONS
• Set wages (ex. $120.00 a day) – Not paying prevailing wage
• Do you know what prevailing wage is?
• Who told you how much you would be paid? • Who gives you your check?
• Do you have copies of your checks?
• Cash kickbacks / Threats (“Give me the money or you’re fired”) (Violation of Labor Code 1778)
• What is the procedure for giving back money?
• Cash payments / Pay one worker and have them pay others
• Were you given additional money to pay other workers? • Do you have copies of the check?
• Where do you bank?
COMMON VIOLATIONS
• Having workers sign a blank timecard
• Were you required to sign a timecard that was blank?
• Were you required to sign a timecard with incorrect hours?
• Claimed the workers received a loan or they are repaying the contractor for purchasing items from the company
• Have you ever received a loan from the contractor or are you paying back the contractor for something you purchased (ex. Tools, Vehicle)?
• Have you ever signed a document (Loan or Timecard)?
• Pay the worker the correct wage (CPR’s are correct) and then have them go to the contractors bank, cash the check, and either deposit money directly into contractors account or bring cash back
COMMON VIOLATIONS
• Failure to fund fringe benefit account
• Does your company have a fringe benefit account? • How much is deposited into the account?
• Are you receiving disbursements from the account? • Do you receive statements?
• Who presented the idea for the account?
• Failure to issue wage earnings voucher (Violation of Labor Code 226)
• Do you receive an earnings statement? Do you still have them?
• Secret LCP
• Misclassification
COMMON VIOLATIONS
• Underreporting to Insurance Company and/or EDD (Premium Fraud – Violation of Unemployment Insurance Codes 2117.5 and 2118.5)
• Failure to report worker injuries (Keeps the business’ workers’ compensation insurance experience modification [“X-Mod”] low)
• Have you ever been injured on the jobsite?
• Never had insurance or cancelled their insurance, fake policies
• Failure to dispatch apprentices, pay into the training fund, or hiring more apprentices than journeyman so they can pay at a lower wage • Claim their employees are independent contractors/1099 (Violation of
Labor Code 1771 & 1772)
• Do you have your W-2 forms (1099 Form)?
ADDITIONAL QUESTIONS
• Do you read, write, or speak English?
• Did you take photos / video while on the jobsite?
• Who hired you?
• Who was your immediate supervisor?
• Where is the main office for the company?
YOU NEED TO MONITOR
YOU CAN’T MONITOR IF
YOU DON’T REVIEW THE
CERTIFIED PAYROLL
REPORTS
Labor Code 1726 - The body awarding the contract for public work shall take cognizance…and promptly report any suspected violations to the Labor Commissioner.
CONTRACTOR STATE
LICENSE BOARD (CSLB)
CONTRACTOR STATE
LICENSE BOARD (CSLB)
CSLB WEBSITE
HTTPS://WWW2.CSLB.CA.GOV/ONLINESERVICES/CHECKLICENSEII/ CHECKLICENSE.ASPX
WCIRB WEBSITE
CRIMINALLY PROSECUTING
A CASE
Too much is
never enough!
WHAT CASES WE ARE
INTERESTED IN REVIEWING
• Repeat offenders • Numerous victims
• Not just poor bookkeeping/ be skeptical! • We look at all projects/statute of limitations
COMMON CHARGING SECTIONS
Labor Code 1778 – Taking and receiving portion of worker’s wage on
Public Works
Penal Code 115(a) – Record false and forged Instrument
Insurance Code 11760(a) – Misrepresent Facts to Worker’s Compensation
Insurance Company
Insurance Code 11880(a) – Cover’s fraud against SCIF
Unemployment Insurance Code 2117.5 – Failure to properly report
payroll taxes
LABOR CODE 1776
1776. (a) Each contractor and subcontractor shall keep accurate payroll records, showing the name, address, social security number, work classification, straight time and overtime hours worked each day and week, and the actual per diem wages paid to each journeyman, apprentice, worker, or other employee employed by him or her in connection with the public work. Each payroll record shall contain or be verified by a written declaration that it is made under penalty of perjury, stating both of the following:
(1) The information contained in the payroll record is true and correct.
(2) The employer has complied with the requirements of Sections 1771, 1811, and 1815 for any work performed by his or her employees on the public works project.
LABOR CODE 1776
(c) The certified payroll records shall be on forms provided by the Division of Labor Standards Enforcement or shall contain the same information as the forms provided by the division. The payroll records may consist of printouts of payroll data that are maintained as computer records, if the printouts contain the same information as the forms provided by the division and the printouts are verified in the manner specified in subdivision (a).
PREMIUM FRAUD
California Labor Code Section 3700 requires all employers except for State agencies to obtain Workers’ Compensation Insurance for their employees. This insurance may be obtained from a private insurance company or from the State Compensation Insurance Fund (SCIF). Premiums for this insurance are based on three factors: (1) a standard rate for the classification of work being performed, (2) a risk factor based on the company’s past history of claims, and (3) the total payroll for the period being insured.
HOW TO CALCULATE PREMIUMS
Payroll x Rate x Experience Modification (Ex Mod) = PREMIUM DUE
CONSEQUENCES OF EMPLOYER
PREMIUM FRAUD
• Unfair Competition
• Theft to Insurance Carrier
• Other employers must pay lost premiums through increased rates • Theft and added risks to employees
WORKER’S COMPENSATION
INSURANCE RATING BUREAU (WCIRB)
Sets the rules for…
• Reporting payroll • Job classifications • “Recommends” rates
• Changes in employer entities
• Maintains employer loss histories • Maintains employer ex-mods
HOW EMPLOYER PREMIUM
FRAUD IS COMMITTED
Underreporting of Payroll
• Not reporting all employee payroll to the insurance carrier.
Misclassification of Payroll
• To classify workers under a classification rate that generates a lower premium.
Experience Modification Evasion
• To evade a loss history and fraudulently obtain a new experience modification rate.
WORKER MISCLASSIFICATION
• Journeyman vs. Entry Level Carpenter • Laborer vs. Tender
• Laborer vs. Cement Mason • Laborer vs. Office Staff
EMPLOYMENT DEVELOPMENT
DEPARTMENT (EDD)
EDD Payroll Tax Evasion
• EDD collects personal income taxes, disability insurance,
unemployment insurance, and employment training taxes from employers.
• These taxes are based upon the employee’s gross wages.
• Underreporting employee wages is a common scheme used to evade employment taxes.
STANDARD OF
PROOF-PRESUMPTION IS IN FAVOR
OF THE DEFENDANT
•
Reasonable doubt
Trial
•
Preponderance
Grand Jury – Preliminary
Hearing
CRIMINAL CASE PROCEDURE
Complaint
Arraignment
Discovery
Preliminary Hearing
Trial
Grand jury
Arraignment
Discovery
Trial
CONVICTION
DISCOVERY OBLIGATIONS
• Request for information • Same team!
• Potentially risking the case
CONTRACTOR STATE LICENSE BOARD
California Penal Code 23 – The court can order:
• Criminal proceeding
• License to engage in a business or profession by a state agency pursuant to provisions of the Business and Professions Code or the Education Code, or the Chiropractic Initiative Act to furnish pertinent information, make recommendations regarding:
• Specific conditions of probation, or
• Provide any other assistance necessary to promote the interests of justice and protect the interests of the public
• Substantially related to the qualifications, functions, or duties of a licensee
STATISTICS (JULY 2011 – PRESENT)
Search Warrants Served: 36
Includes business, homes, banks, etc.
Cases Filed: 6
• Southland Construction (Completed - Received 2 years prison) • SDB Construction (Court Case pending)
• AAA HVAC (Court Case pending) • Malcon Civils (Court Case pending)
• Zolman Construction (Completed – (2) defendants received 6 months jail time and 3 years probation)
• Siapin Horticulture (Court Case pending)
Grand Jury Indictments: 4
• Reza Mohammedi (Southland Construction) • Sourin Babayan (SDB Construction)
• Daniel Siapin (Siapin Horticulture) • Gabriel Siapin (Siapin Horticulture)