SAN DIEGO - A grand jury in San Diego has indicted the owners of the janitorial company Good Neighbor Services, as well as six accomplices for a massive, ongoing insurance fraud and tax evasion scheme amounting to $7 million.
"This case involved extensive work by state investigators with the California Department of Insurance, Employment Development Department, and Department of Industrial Relations," said California Statewide Law Enforcement Association (CSLEA) President Alan Barcelona. "Their work, along with the San Diego County District Attorney's Office, uncovered workers' compensation fraud, tax evasion and extortion."
Good Neighbor Services owners, Hyok “Steven” Kwon and Woo “Stephanie” Kwon, have been indicted on 11 counts of workers’ compensation premium fraud, 18 counts of payroll tax evasion and one count of extortion. Their janitorial company provides cleaning staff to major hotels across San Diego, Los Angeles and Riverside Counties, including The Hotel Del Coronado, Loews Coronado, La Costa Resort and Spa, The Grand Del Mar in La Jolla, L’Auberge Del Mar, The Ritz Carlton, Four Seasons, Hilton and Hyatt hotel chains.
The investigation uncovered a methodical and systematic shell game involving six straw owners. These straw owners were used to conceal the existence of hundreds of hotel workers to avoid paying millions of dollars in insurance premiums and payroll taxes.
“These defendants lied on the backs of their employees who were cleaning rooms in some of the most prestigious hotels in California,” San Diego District Attorney Bonnie M. Dumanis. “If employees got hurt on the job, they were threatened with being fired.
It is alleged, that for nearly a decade, Good Neighbor Services concealed its real payroll information in order to fraudulently obtain workers’ compensation insurance from multiple companies. In doing this, the company avoided paying more than $3.6 million in insurance premiums and evaded paying more than $3.3 million in payroll taxes.
Employees who were interviewed said they were paid with checks bearing the name of businesses other than Good Neighbor Services throughout the course of their employment, even though they wore uniforms with the Good Neighbor Services’ logo and identified the Kwons as the owners. The employees also said they did not receive overtime pay or workers’ compensation benefits when they were injured on the job, and they feared retaliation if they reported their injuries. One employee said she had to repeatedly ask for medical attention for her injury. When she was finally sent to a doctor, she found out later, the Kwons sent her to a dentist rather than a physician.
In addition to the Kwons, six co-defendants have also been charged with worker's compensation premium fraud and tax evasion. They are:
Melquiades Brizuela, Jr,
Veronica Lucas Cuin,
Aimee Sunmyung Kwon,
Hyun Bung Chae
The six co-defendants face sentences between six and eight years in prison. Steven and Stephanie Kwon each face up to 31 years in prison.