“Hiding true payroll amounts to reduce workers’ comp premiums puts workers at risk and gives offending companies an unfair advantage over law abiding companies in that they can bid lower for jobs.”

CSLEA President Alan Barcelona

SAN JOSE – On May 19, 2025, the California Department of Insurance (CDI) announced that the owner of a San Jose-based security company, Raul Chavez, 40, was sentenced after a CDI investigation uncovered a six year-long scheme to underreport payroll and avoid paying workers’ compensation insurance premiums.

Chavez pleaded guilty to felony premium fraud, was sentenced to 180 days in county jail, two years of formal probation, and ordered to pay $225,168 in restitution to the State Compensation Insurance Fund (State Fund). Chavez has paid his restitution and served his jail time on electric monitoring.

Chavez owned and operated Tactical Operations Protective Services, a limited liability company providing security guard, staffing, and patrol services in Santa Clara County. The Department received a suspected fraud referral in September 2023 from State Fund alleging Chavez failed to report an employee injury that occurred in June 2022. The referral further alleged Chavez had significantly underreported payroll for multiple security guards over a six-year period.

Although Chavez transported the injured worker to an emergency room on the date of the injury, he failed to notify State Fund or report the incident as required. The Department’s investigation revealed that from 2017 to 2022, Chavez had falsely claimed to State Fund that he had no employees or payroll. For the 2022 to 2023 policy year, he reported only $40,000 in payroll related to the injured employee.

However, the Department’s audit uncovered that Chavez concealed $3,431,903 in payroll from 2017 through 2023. This underreporting resulted in an estimated $205,565 in unpaid workers’ compensation premiums owed to State Fund.

The case was prosecuted by the Santa Clara County District Attorney’s Office.