SANTA CRUZ, Calif. - The owner of  Costa Bella Builders, a construction company in the Santa Cruz area, and two of his family members were convicted of committing worker's compensation insurance premium fraud.

Jeffrey Thranow, 59, failed  to report employees to his insurance carrier or to the Employment Development Department (EDD). Thranow's son-in-law, Vittorio Castelli, 34, was also convicted of felony insurance fraud.  Thranow's daughter, Kathleen Castelli, 34, was convicted of misdemeanor insurance fraud.

"Fraud is a multi-billion dollar enterprise, which artificially inflates costs to insurers, consumers, and California's taxpayers," said Commissioner Dave Jones. "Thranow cheated both his workers' compensation insurer and the State of California out of nearly $100,000, and by doing so passed the cost of his fraud onto consumers across the state. Through a collaborative effort between my department and the Santa Cruz District Attorney's Office, we have brought another non-compliant contractor to justice."

Department of Insurance investigators began an investigation into the Costa Bella Builder in November 2011 in response to an employee injury. Thranow, a licensed contractor operating in Aptos, paid employees in cash in an attempt to avoid paying workers' compensation insurance. The investigation uncovered evidence that Thranow along with his daughter and son-in-law colluded to convince employees to accept these cash payroll payments. A Costa Bella employee was injured during this time and required surgery. Thranow dissuaded this employee from filing a workers' compensation claim and instead offered him a State Disability Form with instructions to claim the injury occurred while the employee was home.

"This is a classic example of what unscrupulous business people will stoop to, to avoid paying workers' comp insurance, " said Alan Barcelona, president of the California Statewide Law Enforcement Association (CSLEA).  CSLEA represents Department of Insurance investigators in addition to nearly 7,000 other law enforcement, public safety and consumer protection professionals who work for the State of California.   "This is an outrage to consumers and to employees who are left unprotected."

Costa Bella Builders was ordered to pay more than  $47,000 in premium restitution, nearly $30,000 in back taxes to EDD, and pay $37,000 in restitution related to the injured workers claim.       

• Jeffrey Thranow was sentenced to one year of jail.
• Vittorio Castelli was sentenced to six months of jail. 
• Kathleen Castelli was sentenced to one year of probation.