California Arrests Three in Alleged $5 Million Comp Fraud

The state's insurance commissioner, Steve Poizner, announced the arrests this week of three people who operated a general building contractor and allegedly falsified the type of work being done and wages paid on construction jobs.

Alleging that three arrests had broken up a $5 million fraud, California Insurance Commissioner Steve Poizner said Monica Mui Ung, 49, of Alamo; Joey Ruan, 31, of San Leandro; and Tin Wai Wu, 28, of Millbrae have been charged with 48 counts of workers' compensation insurance fraud, labor code violations, and tax fraud. Bail was set at $535,000 for each suspect, according to the Insurance Department.

"When businesses cheat the system to save money, they are only setting themselves up to pay later, by serving time in prison," Poizner said. "The Department of Insurance will not stop going after fraud perpetrators until every one is brought to justice."

Ung owned and operated NBC General Contractors Inc., a general building contracting company that relied mainly on public works projects such as El Cerrito City Hall. From May 2003 to May 2007, the company won at least 27 public works projects in five counties. "The cost for NBC's workers' compensation insurance was determined by employee wages, total amount of payroll and job classifications of the employees. Ung, Ruan and Wu allegedly made intentional and material misrepresentations to their workers' compensation insurance carrier to misclassify the type of work their employees were performing, as well as falsely reporting the hourly wage of more than 70 employees, saving them a significant amount in workers' compensation premiums," according to the department's news release.

Not only did NBC have a significant advantage over other bidders because of the alleged misrepresentations, but also the alleged false reporting resulted in a total loss of premiums of more than $1.45 million. The department alleges NBC did not pay overtime or sick leave to employees, as required under labor laws, accounting for an additional $3.6 million in unpaid wages to 19 employees. The case is being prosecuted by the Alameda County District Attorney's Office.

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