On May 6th, 2021

Construction Firm Owner Pleads to Workers Comp Fraud CDI, DIR, CSLB assisted with this investigation

SANTA CLARA COUNTY – On May 5, 2021, the Santa Clara County District Attorney’s Office announced that Man Tat Szeto, the owner of a large Bay Area construction firm, admitted to committing felony workers’ compensation insurance fraud after years of firing employees when they requested medical treatment for work-related injuries.

Between 2016 and 2019, Szeto, 71, of San Ramon, avoided approximately $86,000 in premium payments to his insurer by underreporting employees and injuries. To further his scheme, Szeto used the banking system to launder $165,000 to pay employees “off the books.”

Szeto was also charged with unemployment insurance tax fraud and money laundering. Szeto’s plea agreement requires that he be placed on five years formal probation, serve nine months in county jail, and make restitution of approximately $250,000.

The Santa Clara County District Attorney’s Office, in coordination with the California Department of Insurance and the Department of Industrial Relations, investigated Szeto for nearly two years. California Contractors State License Board brought this case to the attention of the Santa Clara County District Attorney’s Office as a result of suspicious activity that occurred at a new residential construction project in San Jose.

“This is an example of state investigative agencies working together with district attorneys’ offices to protect employees from unscrupulous employers,” said California Statewide Law Enforcement Association (CSLEA) President Alan Barcelona. “Employees working to support themselves and their families deserve to be protected should they be hurt on the job, not fired.”

Worker’s compensation premium fraud occurs when an employer makes material misrepresentations to an insurance carrier about its claims history, payroll or risk classification of its workers, in order to obtain insurance coverage at less than the proper rate.

MT Szeto Construction handles commercial, multi-family and residential construction projects throughout the greater San Francisco Bay Area. In late 2018, multiple former employees reported that they had been fired after requesting medical treatment for injuries they had sustained while at work. The employees who frequently worked upwards of 70 hours would be paid for only 40 hours. When an employee injured himself, rather than file an appropriate claim with the employee's insurance company and risk an increase in premium, Szeto simply handed them cash and terminated them.

California Contractors State License Board brought this case to the attention of the Santa Clara County District Attorney’s Office as a result of suspicious activity that occurred at a new residential construction project in San Jose.

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