On January 31st, 2022

Arcadia Couple Charged in $4.5 million workers’ compensation fraud scheme A CDI and DIR investigation found husband and wife business owners allegedly underreported payroll and committed wage theft

“The jobs that detectives and investigators employed by the State of California do, often go unnoticed by the general public, but they work daily to uncover criminal behavior that harms the financial health of our state and our citizens.” – CSLEA President Alan Barcelona

LOS ANGELES — On January 27, 2022, the California Department of Insurance (CDI) announced that Wei Wen Wu, 54, and Feng Wen Lam, 49, both of Arcadia, are charged with 43 felony counts of insurance fraud, grand theft, and conspiracy after allegedly underreporting nearly $4.5 million in employee payroll.

The scheme fraudulently reduced their company’s workers’ compensation insurance premium resulting in a loss of approximately $1.7 million in unpaid insurance premiums. A parallel investigation by the California Department of Industrial Relations (DIR) uncovered significant alleged wage theft from employees at the couple’s chicken processing business in El Monte.

Lam is the owner of Golden Food Inc. (GFI), a chicken processing business employing butchers and meatpackers located in El Monte, which receives chicken carcasses and breaks them down into boxes of chicken parts for sale. Lam’s husband, Wu, operated the business.

The Department of Insurance launched an investigation after receiving a referral from State Compensation Insurance Fund (State Fund), which suspected the business of fraud after comparing the payroll reported during annual audits with the payroll reported to the Employment Development Department. After obtaining search warrants for GFI, the Department was able to obtain the true payroll records from the company’s computer and found fake tax reporting forms.

The investigation revealed between 2015 and 2021, GFI underreported its payroll to its workers’ compensation insurance carriers by $4,489,390, resulting in a loss of $1,681,138 in unpaid insurance premiums to four insurance companies, including State Fund.

In addition to the CDI investigation, the DIR investigation alleges employees were forced to clock out for breaks and continue to work, were not paid overtime for work in excess of 40 weekly hours, and their pay stubs were falsified. According to the investigation, Wu routinely deducted work hours from employees and falsely counted that pay as bonus. An audit by DIR found that Lam and Wu failed to pay at minimum $437,542 in labor to their 34 employees based on the minimum legal market value.

Wu and Lam are scheduled to appear in court on March 29, 2022.

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