On April 18th, 2016

Five Defendants Arraigned For Tax And Insurance Fraud And Failing To Pay Employees Prevailing Wage

csleaSANTA ANA- When a worker in Santa Ana contacted his union about possible wage theft and other illegal activity by an employer, the Department of Industrial Relations and Labor Commissioner's Office and the Orange County District Attorney’s Office stepped up to investigate.  As a result of that investigation, on April 12, 2016, five people were arraigned for committing more than  $635,000 in tax and insurance fraud, and failing to pay employees prevailing wage on public works contracts.

The five were identified as:

Babak Brian Abghari, 36, of Newport Coast,

Homayoun Harry Abghari, 57, of Huntington Beach,

Julio Roberto Alvarado, 47, of San Pedro,

Cody Lawson, 34, of Long Beach,

and Phyllis Martinez, 51, of Anaheim.

All  five  are each charged with eight felony counts of taking and receiving a portion of a worker’s wage on a public works project, 56 felony counts of recording a false or forged instrument, six felony counts of making a false statement to discourage an injured worker from claiming benefits, and seven felony counts of willful failure to pay taxes, with sentencing enhancement allegations for property loss over $200,000.

"Working individuals deserve to be paid fairly and to be taken care of should they be injured on the job," said California Statewide Law Enforcement Association (CSLEA) President Alan Barcelona.  "State investigators routinely check out claims of illegal activity by employers to protect employees from physical and financial harm."

According to the investigation, Houmayoun Abghari and Babak Abghari own and operate PCN3, a general contracting company that mainly conducts public works projects.  Between January  1, 2000, and March 30, 2015, the defendants are accused of fraudulently paying PCN3’s employees less than the prevailing wage in cash, and keeping the extra money owed to their employees. The defendants are accused of “shorting” the victims’ hours on certified payroll reports and/or requiring their victims’ to give cash back.

Houmayoun Abghari and Babak Abghari are accused of discouraging the victims from filing for workers’ compensation benefits after being injured on the job,  knowingly filing false tax returns in which they understated the pay and amount of hours that their employees received. The two are also charged with three felony counts of misrepresenting facts to a workers’ compensation insurance company.

Martinez, an office clerk at PCN3 is accused of  knowingly signing fraudulent certified payroll records under penalty of perjury.

Lawson, a superintendent,  and Alvarado, a foreman for PCN3 on public works projects, are accused of not paying employment taxes. Lawson and Alvarado are accused of giving paychecks or cash to victims for their work on the projects.

On several occasions the defendants are accused of telling the victims to get a fictitious business license and paying them less than the prevailing wage for sub-contracting work they performed.

“Prevailing wage laws are on the books to ensure skilled workers on public construction contracts are paid fairly, and employers who skirt these laws with wage theft are committing crimes,” said California Labor Commissioner Julie A. Su. “My office is proud to work with the Orange County District Attorney’s Office on our common goals of bringing scofflaws to justice and ensuring a level playing field for legitimate businesses in the State.”

If convicted, the defendants face a maximum sentence of 49 years and six months in state prison.

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