MODESTO - On December 9, 2019, the Stanislaus County District Attorney’s Office announced that Michael Zendejas, a former owner of a Modesto temporary employment agency, has been convicted of workers’ compensation insurance premium fraud and was ordered to pay close to a million dollars in restitution.
Zendejas was the owner and president of Trinity Personnel Inc., an agency that provided temporary workers to cover absences, skills shortages and seasonal workloads for client companies. Zendejas obtained a workers’ compensation policy from the State Compensation Insurance Fund (State Fund) in September of 2014 and maintained that policy through December of 2016. Afterward, State Fund performed an audit of the policy and discovered that Zendejas had underreported payroll and the number of employees to obtain a lower workers’ compensation insurance premium. In total, Zendejas underreported payroll of approximately $4.9 million that resulted in a loss of $944,718.68 in insurance premiums to State Fund.
State law requires that employers must have workers’ compensation insurance for their employees and submit payroll records showing the number of employees and their income. This information helps determine workers’ compensation insurance rates. Premium insurance fraud is committed when an employer intentionally misrepresents the number of employees, the type of work performed, or the amount of payroll.
On November 22, 2019, Zendejas pled no contest to Insurance Fraud, in violation of Insurance Code section 11880(a), as a felony, in that he knowingly made false and fraudulent material statements to State Fund for the purposes of determining and reducing the premium, cost or rate of his workers’ compensation insurance policy. He was sentenced to 180 hours of community service, three years formal probation, and ordered to pay restitution of $944,718.68 to State Compensation Insurance Fund.
This case was a joint investigation by California Department of Insurance, Fraud Division and the Amador County Workers’ Compensation Fraud Unit, which investigates and prosecutes insurance fraud cases in Stanislaus County through a grant provided by the California Department of Insurance. If you think someone is committing workers’ compensation fraud, report it to the California Department of Insurance Fraud Hotline at (916) 854-5700.
“This investigation and conviction should serve as a warning to business owners who are knowingly falsifying numbers to lower their worker’s comp insurance premiums,” said California Statewide Law Enforcement Association (CSLEA) President Alan Barcelona. “There are very competent investigators in both the State Compensation Insurance Fund and the Department of Insurance who will catch up with those committing insurance and insurance premium fraud.”