By Khalida Sarwari
Santa Clara County prosecutors are accusing a Campbell man of running a major insurance fraud scheme that resulted in the loss of more than $200,000 to his employees’ compensation insurance carrier.
Bill Won Yi, 42, was arrested by sheriff’s deputies on April 12, nearly three years after the district attorney’s office launched an investigation into allegations of fraud brought forward by the State Compensation Insurance Fund.
The fraud was discovered by the state fund, a quasi-public agency that offers workers’ compensation insurance, in 2009 following an injury claim filed by one of Yi’s employees at BK Painting Inc., a commercial and residential painting company in Mountain View. The business has since been shuttered.
“My understanding is that the business is no longer operational,” said prosecutor Christopher Kwok.
From 2004 to 2010, prosecutors claim Yi misrepresented BK Painting’s safety record and grossly underreported its payroll to the insurance company by hiring unlicensed contractors and paying some employees’ wages in cash, according to Kwok. Doing so fraudulently reduced Yi’s workers’ compensation insurance premium.
Businesses are mandated to maintain workers’ compensation insurance to protect workers. The insurance premium is based on factors such as the nature of a business, safety record and the employees’ wages as reported by an employer.
“For example, if your work is ‘tree trimmer’ and power lines, you have a different rating than, say, an office worker,” said Kwok.
Yi’s scheme placed workers at risk of having insufficient or no insurance coverage if they were injured on the job, said Kwok.
“Furthermore, it illegally lowers operating costs for offending businesses, thereby giving them an unfair competitive advantage over law-abiding businesses,” he said.
Citing the ongoing investigation, Kwok couldn’t say how many of Yi’s workers were affected. As for BK Painting’s accident history, he would say only that it was a “substantial number.”
Kwok said the fraud, though common, is typically hard to discover.
“This type of investigation is complicated and involves taking a look at a lot of records,” he said.
Yi will be arraigned this week on one count of felony workers’ compensation insurance premium fraud. If convicted, he may be sentenced up to five years in jail and ordered to pay full restitution.