MARTINEZ- On July 26, 200, Maurosan Milhomem pleaded no contest to six felonies related to his complex fraud schemes of insurance premium fraud and payroll tax fraud. He also admitted a white- collar crime enhancement that he caused the loss of more than $500,000.
Milhomem is the owner of Viking Pavers, Inc., a construction company based out of Point Richmond. The successful resolution to this criminal case was a result of a joint investigation by the Fraud Division of the California Department of Insurance, Criminal Investigation Division of the Employment Development Department, and the DA’s Office.
“This case demonstrates the need for state investigators and their expertise in investigating crimes of fraud that can impact workers if they are hurt, state finances and those businesses that do pay their taxes and insurance premiums,” said California Statewide Law Enforcement Association President Alan Barcelona.
The Contractors’ State Licensing Board and Department of Industrial Relations previously issued Viking Pavers, Inc. civil citations in 2017. Investigators from the Board and Marin County District Attorney’s Office discovered a subcontractor work crew operating for the company without a license and without worker compensation insurance under the name FF Services during a random job site inspection. The Business and Professions Code does not permit construction companies to subcontract construction work unless the crews have their own license. This is because licensed subcontractors are required to have their own bond and workers compensation insurance to protect homeowners and employees.
The District Attorney’s Office learned of the fraud after employees of Viking Pavers were involved in a vehicle accident. The employees were never reported during premium audits as employees or subcontractors. These audits help confirm if an employer is following the law and ensure the appropriate classifications for their employees and subcontractors.
The investigation by the Contra Costa County District Attorney’s Office revealed that Viking Pavers continued to use FF Services as an unlicensed subcontractor after the civil citations and throughout 2018. The company re-routed the payments off the books to avoid detection during required audits. Forensic accountants traced payments to FF Services and other unlicensed and uninsured work crews, initially through a check cashing service in Richmond, California, and then through the bank accounts of a newly created a shell company. A subsequent search warrant at the business resulted in the seizure of over $80,000 in cash.
Milhomem will serve 364 days in county jail and is eligible to serve the sentence through electronic home detention. In addition, he will serve five years of formal probation. He is ordered to pay:
- $1,109,603 to Markel Corporation for the underpayment of workers’ compensation insurance premium,
- $808,455.34 to the Employment Development Department for the underpayment of tax liability and
- $312,000 to Berkshire Hathaway for the underpayment of workers’ compensation insurance premium.
The Court ordered the seized cash forfeited as criminal restitution pursuant to the plea agreement.
Insurance premium fraud by employers is unfair to workers, who may see questions about their employment status result in delayed or even denied coverage after an injury. Such fraud is also unfair to law-abiding competitors who cannot compete as they pay the legally required costs to provide coverage for their own workers. A forensic audit estimated that Viking Pavers evaded over $2 million dollars of insurance premiums and taxes that a law-abiding competitor would have had to pay over the same seven-year period.