Building a Criminal Case For Prosecution of Public Works Violations ORANGE COUNTY DISTRICT ATTORNEY S OFFICE PUBLIC WORKS UNIT

38  Download (0)

Full text

(1)

ORANGE COUNTY

DISTRICT ATTORNEY’S OFFICE

PUBLIC WORKS UNIT

Building a Criminal Case

For Prosecution of

(2)

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.

(3)

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

(4)

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)

(5)

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

(6)
(7)

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

(8)

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

(9)

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?

(10)

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?

(11)

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

(12)

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

(13)

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)?

(14)

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?

(15)

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.

(16)

CONTRACTOR STATE

LICENSE BOARD (CSLB)

(17)

CONTRACTOR STATE

LICENSE BOARD (CSLB)

(18)

CSLB WEBSITE

HTTPS://WWW2.CSLB.CA.GOV/ONLINESERVICES/CHECKLICENSEII/ CHECKLICENSE.ASPX

(19)

WCIRB WEBSITE

(20)

CRIMINALLY PROSECUTING

A CASE

Too much is

never enough!

(21)

WHAT CASES WE ARE

INTERESTED IN REVIEWING

Repeat offendersNumerous victims

Not just poor bookkeeping/ be skeptical!We look at all projects/statute of limitations

(22)

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

(23)

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.

(24)

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).

(25)
(26)
(27)

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

(28)

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

(29)

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

(30)

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.

(31)

WORKER MISCLASSIFICATION

Journeyman vs. Entry Level CarpenterLaborer vs. Tender

Laborer vs. Cement MasonLaborer vs. Office Staff

(32)

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.

(33)

STANDARD OF

PROOF-PRESUMPTION IS IN FAVOR

OF THE DEFENDANT

Reasonable doubt

Trial

Preponderance

Grand Jury – Preliminary

Hearing

(34)

CRIMINAL CASE PROCEDURE

Complaint

Arraignment

Discovery

Preliminary Hearing

Trial

Grand jury

Arraignment

Discovery

Trial

CONVICTION

(35)

DISCOVERY OBLIGATIONS

Request for informationSame team!

• Potentially risking the case

(36)

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

(37)

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)

(38)

QUESTIONS?

Contact Information:

DDA Donde McCament

(714) 664-3911

donde.mccament@da.ocgov.com

Investigator Elaine Noce

(714) 664-3926

Figure

Updating...

References

Related subjects :