On November 17th, 2015

Man Sentenced to Prison for $2 Million Tax Evasion & Insurance Fraud Scheme

csleaSANTA ANA – On November 13, 2015, A Laguna Hills man was sentenced to one year and four months in state prison for his role in a $2 million tax evasion and insurance fraud scheme.  His wife, sentenced previously for involvement in the same case, was sentenced to three years formal probation.   Both are ordered to pay restitution as well.

"State investigators, teamed with local district attorneys, will hold business owners accountable," said California Statewide Law Enforcement Association (CSLEA)  President Alan Barcelona.  "CSLEA represents state investigators from multiple departments, who now work together to share information, moving investigations along much more quickly and resulting in arrests and convictions."

Rand Robert Gordon, 61, pleaded guilty Feb. 19, 2015, to 60 felony counts involving misrepresenting facts to the State Compensation Insurance Fund (SCIF), filing a false tax return, willful failure to file or make fraudulent tax return, making false statements, making false statements to discourage injured worker from claiming benefits, failing to file a return with intent to evade tax, willful failure to pay tax, and a sentencing enhancement for aggravated white collar crime over $500,000. Gordon paid $385,000 in restitution and was ordered to the remaining $2 million dollars by civil judgment.

Michele Louise Gordon, 62, pleaded guilty Feb. 19, 2015, to four felony counts of willful failure to file or make fraudulent tax returns and one felony count of filing a false tax return. In addition to her  sentence of three years formal probation, she was ordered to pay a $5,000 fine, and $464,560 restitution.

The Gordons paid the Franchise Tax Board (FTB) $123,189.12 toward the restitution and were ordered to pay the remaining restitution of $341,370.88 by civil judgment.

The Gordons owned and operated moving service companies under the business names Gordon Moving Services Inc., Gordon Moving and Storage Inc., GMS Solutions, and various other names.

On Oct. 30, 2006, Rand Gordon obtained an insurance policy for his company with SCIF. He failed to make quarterly payments to SCIF and the policy was subsequently cancelled on Jan. 26, 2009. On March 26, 2009, Rand Gordon renewed his insurance policy with SCIF. On each of those policies, Rand Gordon knowingly made false and fraudulent statements by underreporting his payroll to SCIF and failed to pay taxes to the Employment Development Department (EDD).

Between January 2006 and December 2010, Rand Gordon underreported premiums to SCIF and taxes to EDD. The Gordons kept the taxes meant to go to EDD and used it for their personal income. During that time period, the Gordons failed to file tax returns or gave false information to FTB. Rand Gordon owed $875,000 to SCIF, $878,905.11 to EDD, and $649,730 to FTB.

On Jan. 9, 2008, Rand Gordon told one of his workers, John Doe 1, to lie about how an injury occurred during a work assignment, while the defendant was driving the victim to a hospital.

On Sept. 3, 2009, Rand Gordon dissuaded John Doe 2 from filing a workers compensation claim for an injury sustained at work with the intent of keeping his loss history at a minimum to keep the premium on his insurance low. John Doe 2 filed a workers compensation claim.

SCIF contacted John Doe 2 regarding his workers compensation claim. While the claim was under review, SCIF discovered potential fraud and submitted a report to the Premium Fraud Task Force regarding the Gordons’ account. The Orange County District Attorney’s Office Bureau of Investigation, EDD, FTB, and California Department of Insurance investigated this case.

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