Presentation on theme: "Institute of Management Accountants Student Night at the Spectrum."— Presentation transcript:
Institute of Management Accountants Student Night at the Spectrum
Premium Fraud & Tax Evasion DOMINIC I. DUGO Chief, Insurance Fraud Division San Diego County District Attorney’s Office (619) By October 14, 2013 SD Chapter of the Institute of Management Accts. JESSE NAVARRO Director of Community Relations San Diego County District Attorney’s Office (619) BONNIE M. DUMANIS District Attorney
Mission Statement The employees of the San Diego District Attorney, in partnership with the community we serve, are dedicated to the pursuit of truth, justice and protection of the innocent, and the prevention of crime through the vigorous and professional prosecution of those who violate the law.
San Diego County District Attorney’s Office District Attorney Bonnie Dumanis Assistant District Attorney Jesse Rodriguez 330 W. Broadway, Suite 1300 San Diego, CA (619)
Public Safety Topics District Attorney’s Office Mission & Responsibilities Juvenile Justice & Criminal Court System Anti-Bullying in Schools & Cyber-Bullying Prevention Child Abduction & Child Abuse Prevention Internet Crimes Against Children & Adolescents Elder Abuse Domestic Violence & Restraining Orders Hate Crimes
Public Safety Topics Gang Prevention & Enforcement Narcotics Prevention & Enforcement Driving Under the Influence & Consequences Social Host Law/Underage Drinking & Consequences Check Enforcement Program & Embezzlement Identity Theft & Consumer Protection Real Estate, Immigration & General Fraud Worker’s Compensation, Employer & Employee Fraud
San Diego County District Attorney’s Office Contact for Public Safety Topics: Jesse Navarro, Director of Community Relations 330 W. Broadway, Suite 1300 San Diego, CA (619)
USA INSURANCE FRAUD $80-$90 Billion a Year
USA TAX EVASION #1 Economic Crime followed by Insurance Fraud
CAL. INSURANCE FRAUD $15 Billion a Year. Tax of $500 per Person.
Income Tax Evasion CALIFORNIA $6.5 Billion (FTB)
Underground Economy $100 Billion Annually $5 Billion of Payroll Tax Loss CALIFORNIA
CAL. WORKERS’ COMPENSATION FRAUD Est. $4 Billion per Year
OUTLINE I.San Diego’s IF Division II.Deterrence Program III.Premium Fraud and Tax Evasion
II. San Diego Insurance Fraud Division Grant Funded Units Workers’ Compensation Fraud Auto Theft Auto Insurance Fraud Disability, Healthcare Fraud Life Insurance Fraud Staff 16 Attorneys 15 Investigators 8 Paralegals 10 Support Staff
Workers’ Comp San Diego Prosecutions:115 Convictions: 121 Investigations: 516
II. San Diego’s Deterrence Program Billboards Posters Movie Ads Ethnic Newspapers Chambers of Commerce TV Ads
Billboard Ads, 2009 & Billboards 4 to 6 Weeks 1 Million People a Day
San Diego DA CDI Franchise Tax Board Labor Commissioner Contractors’ Licensing Board Employment Development Department Task Force Members
2007 Berkley Study Fraud 19% to 23% (2002) $3.2 to 3.8 Billion in lost premium. 75% of Payroll in high risk not reported.
2007 Berkley Study “If you ain’t cheatin, you ain’t tryin.” Conclusion: NASCAR saying
2007 New York Study Fraud 15% to 20% $500 million to $1 billion in lost premium.
Boston Big Dig Tunnel Workers Reported to Carrier as Clerical. Loss: $11 million
Workers’ Compensation Required of Employers Coverage SCIF or Private Carrier
Workers’ Comp Premium Payroll x Class Rate x Experience Modification
$300,000 x 10% ($10 per $100) x 1 = $30,000 Landscaper PAYROLL x CLASS RATE x EXP. MOD
$100,000 x 10% ($10 per $100) x 1 = $10,000 Landscaper $300,000 x 10% ($10 per $100) x 1 = $30,000
$300,000 x 40% ($40 per $100) x 1 = $120,000 Tree trimmer $300,000 x 10% ($10 per $100) x 1 = $30,000 Landscaper PAYROLL x CLASS RATE x EXP. MOD
$300,000 x 10% ($10 per $100) x 2 = $60,000 Landscaper $300,000 x 10% ($10 per $100) x 1 = $30,000 PAYROLL x CLASS RATE x EXP. MOD
Three Types of Premium Fraud 1.Underreport Payroll Cash Pay Independent Contractors Labor paid in Rent, Vehicle, Supplies
Three Types of Premium Fraud 2. Misclassification a. Type of Work landscaper v. tree trimmer janitor v. roofer clerical v. construction b. Hourly Wages (Dual Wages) Concrete over $24 hr. Carpentry over $26 hr. Plastering over $25 hr. Roofing over $23 hr.
Three Types of Premium Fraud 3. X-Mod Evasion a. Identity Change Same Company, change name b. Fail to Report Injuries Injured workers not provided WC Benefits.
Consequences of Premium Fraud Unfair Competition Theft to Insurance Carrier
Who Uncovers Premium Fraud? Competitors Employees Tax auditors Insurance company auditors
Payroll Tax Evasion Crime often committed with premium fraud
Payroll Taxes Employer - 1 Employee and Payroll Over $100 in Calendar Quarter Employer - Files Quarterly Payroll Tax Returns (DE9) CALIFORNIA
Payroll Taxes CALIFORNIA Out of Employer’s Pocket 1.Unemployment Tax 2.Training Tax Withheld From Employee’s Wages 3. Personal Tax Income 4. Disability Insurance Tax