Oakland, CA – The Alameda County District Attorney’s Office along with the California Department of Insurance recently announced that charges have been filed against multiple suspects in an organized insurance and workers’ compensation fraud scheme that defrauded insurance carriers over $5 million in estimated losses.
Former owners of Signature Painting and Construction Inc, Eric Andrew Oller and Brian Christopher Mitchell, were each charged with one felony count of conspiracy to commit a crime, six counts each of felony insurance fraud and two counts of workers’ compensation fraud. SPC is based in Walnut Creek, but operates throughout the Bay Area.
Defendant Yama Sekander, owner of A-1 World Class Painting, was also charged with one count of felony workers’ compensation fraud.
Oller is also the owner of Valhalla Consulting, which along with A-1, was used as a shell company by Mitchell to pay employees at SPC.
From 2017 to 2018, SPC allegedly paid its employees using VC’s bank account, with the intent to illegally reduce its workers’ compensation insurance premium. SPC misrepresented information or didn’t include information about its company structure and payroll costs to its insurance carriers in order to illegally reduce its insurance premiums.
“If a business creates an environment where they falsely pay a lower insurance premium, that company has an unfair competitive advantage over one that is law-abiding,” said District Attorney Nancy E. O’Malley.
It is alleged that Mitchell was illegally misclassifying employees and underreporting payroll costs to reduce workers’ compensation insurance premiums. The riskier the job, the higher premium an employer must pay for workers’ compensation. For example, a clerical worker costs less to insure than a worker engaged in a riskier job. It is alleged that Mitchell misclassified several of these employees to lower premium costs.
“Fraud hurts consumers and businesses. It puts a strain on our economy as legitimate businesses are forced to pay for the cost of fraud through higher insurance premiums,” said Insurance Commissioner Ricardo Lara. “I appreciate the hard work of the Alameda County District Attorney’s Office to curb insurance fraud and protect California consumers and businesses.”
Mitchell and Oller are also accused of entering into agreements to move employees from one company to another, to save money on workers’ compensation insurance. Mitchell is accused of using Sekander’s company, A-1, to obtain a workers’ compensation insurance policy for his company, SPC.
The allegations also include that some employees at SPC were paid “under the table” so that the company could avoid paying or reporting the proper taxes. The defendants also allegedly instructed some injured employees to report working for one company, while in reality, they worked for another.
Insurance carrier SCIF suffered a loss of approximately $3.1 million in premium payments while AmTrust loss was approximately $1.9 million as a result of this fraud scheme.
The investigation into the defendants began in 2019 after the State Compensation Insurance Fund submitted a fraud referral to the California Department of Insurance. The fraud began in 2015.
Charges were filed in late August and all three defendants were arraigned the morning of September 20. Their next court date will be November 18 at the East County Hall of Justice in Dublin.