Consumer Watchdog Sues CA Department of Insurance Over FAIR Plan Surcharges
April 17, 2025 | JacobiJournal.com – A consumer advocacy group has filed a lawsuit against the California Department of Insurance and Commissioner Ricardo Lara, seeking to block hundreds of millions in new insurance surcharges set to impact homeowners statewide. Consumer Watchdog alleges that the Department’s recent decision allows private insurers—who operate the state’s FAIR Plan, California’s insurer of last resort—to pass catastrophe-related costs onto policyholders, rather than absorbing them as the law requires. $500 Million Burden on Homeowners The dispute stems from a $1 billion FAIR Plan assessment approved in February, after wildfires swept through Palisades and Eaton Canyon. Consumer Watchdog argues that the decision allows up to $500 million in costs to be pushed onto homeowners, undermining the purpose of the FAIR Plan. “The commissioner’s decision is unjustified,” said Ryan Mellino, staff attorney for Consumer Watchdog. “It shifts risk to the public while profits remain with the insurers.” According to the group, the decision violates the Administrative Procedure Act, as it was made without public input. The lawsuit also claims the pass-through surcharges breach FAIR Plan statutes, which mandate that insurance companies must share in both the profits and losses of the plan. Industry Pushes Back In response, the American Property Casualty Insurance Association (APCIA) slammed the lawsuit as a “reckless stunt.” “Blocking cost recovery jeopardizes last-resort coverage for homeowners,” said Denni Ritter, APCIA’s VP of state government relations. “This move could push California’s already fragile insurance market toward collapse.” Ritter argued that distributing recovery costs across a broader base helps stabilize the market and keeps essential coverage available to more Californians. State Regulator Responds Gabriel Sanchez, press secretary for the Department of Insurance, said the lawsuit hinders efforts to provide homeowners and small businesses with reliable insurance options. He noted that the goal is to transition consumers away from the limited and expensive FAIR Plan to more competitive coverage options. “This litigation harms the very people it claims to protect,” Sanchez said. “It also undermines our work to strengthen the insurance market overall.” Advocacy Group Warns of Future Impact Consumer Watchdog maintains that the policy sets a dangerous precedent, potentially paving the way for billions more in future surcharges. “California homeowners have already suffered enough,” Mellino said. “This is an unlawful bailout that prioritizes insurance companies over everyday Californians.” Despite the backlash, the insurance industry points out that it has already contributed over $500 million to support the FAIR Plan’s solvency—without collecting premiums from FAIR Plan policyholders. Consumer Watchdog’s full legal petition is available here. Read More from JacobiJournal.com For the latest updates on insurance litigation and market trends, visit JacobiJournal.com.
Former Texas Insurance Broker Charged in Alleged Fraud Scheme
April 17, 2025 | JacobiJournal.com – FRIENDSWOOD, TX – A former Texas insurance broker is facing felony theft charges after allegedly collecting payments from clients for policies he never purchased. Edgar Peralta, of Peralta Insurance Brokerage LLC, turned himself in to Friendswood Police on April 10, 2025. He is charged with theft, a state jail felony, filed by the Galveston County District Attorney’s Office. Fraud Uncovered After Traffic Stop Friendswood Police began investigating Peralta on March 3, 2025, after receiving a fraud complaint from a longtime client. The client had used Peralta for several years to secure homeowner, auto, and flood insurance policies. In May 2024, Peralta reportedly advised the client to prepay for policies covering the upcoming year, promising significant cost savings. However, after a January 2025 traffic stop, the client discovered their auto insurance was invalid. Upon contacting the insurer, they learned the policy had been canceled for non-payment. Further inquiries revealed the same issue with both the homeowners and flood policies. The client provided wire transfer records showing they had paid Peralta directly. However, investigators believe he never forwarded the funds to the insurance companies. License Revoked Months Earlier The situation escalated when the client discovered that Peralta’s insurance license was revoked in June 2024—months before he accepted their latest payments. Despite the revocation, he allegedly continued brokering policies under false pretenses. Former Texas Insurance Broker Ongoing Investigation Friendswood PD has referred the case to the Texas Department of Insurance, which has launched its own investigation. Additional charges may follow based on their findings. Peralta remains under investigation, and authorities urge any other potential victims to come forward. 🔗 Source: Friendswood Police Department Read More from JacobiJournal.com Stay ahead of insurance fraud news by following updates on JacobiJournal.com.
New York Inspector Uncovers $2.7M Workers’ Comp Fraud in 2024
April 17, 2025 | JacobiJournal.com – ALBANY, NY – Workers’ compensation fraud in New York surged in 2024, with Inspector General Lucy Lang reporting $2.7 million in fraudulent activity, marking a nearly 30% increase over 2023. Lang also confirmed 14 arrests, another sharp rise from the prior year. Significant Recoveries for the State In total, Lang’s office helped recover more than $1.4 million in restitution and fines, returning critical funds to state agencies, insurers, and employers. She shared the figures during an April meeting of the Workers’ Compensation Board. Major Cases from the Inspector General’s Report Lang’s annual report highlighted several high-impact investigations, including: A Call for Continued Oversight Lang emphasized the importance of vigilance in identifying fraud within both public and private sectors. Her office continues to oversee workers’ compensation cases across multiple state agencies, reinforcing efforts to protect taxpayer funds and ensure benefits go only to those who qualify. 🔗 Source: New York State Inspector General – 2024 Annual Report Read More from JacobiJournal.com Stay informed on workers’ compensation fraud and regulatory enforcement at JacobiJournal.com.
LA Couple Sentenced for Underreporting Payroll, Filing False Workers’ Comp Claims
April 15, 2025 | JacobiJournal.com – LOS ANGELES – LA Couple Sentenced: John Nemandoust, 70, and Annette Assil, 62, were sentenced after an investigation uncovered their scheme to underreport over $21 million in payroll and submit false workers’ compensation claims. Nemandoust will serve 60 days in county jail, while Assil will serve 30 days. Both face 10 years of felony probation and must pay $2.2 million in restitution for unpaid workers’ compensation premiums. Investigation Reveals Extensive Underreporting The California Department of Insurance (CDI) initiated the investigation into the couple’s three businesses: A-1 Valley Services, Prompt Delivery, and Affordable Messenger. From 2013 to 2017, the couple failed to secure workers’ compensation coverage for two of the companies. Only A-1 Valley Services had insurance, leaving Prompt Delivery and Affordable Messenger uninsured. LA Couple Sentenced Filing False Claims to Evade Payments When employees from the uninsured companies were injured, the couple allegedly filed false claims under the A-1 Valley Services policy. Investigators discovered that the couple misreported $25 million in payroll, only reporting $1.4 million to their insurance carrier. This allowed them to avoid paying $3 million in premiums. Court’s Ruling and Sentence The Los Angeles County District Attorney’s Office prosecuted the case. Nemandoust and Assil will serve their sentences and face continued supervision under probation. 🔗 Source: California Department of Insurance – CDI Press Release Read More from JacobiJournal.com Stay updated on fraud investigations and workers’ compensation cases at JacobiJournal.com.
American Labor Alliance Execs Convicted in Multi-Million Dollar Fraud
April 15, 2025 | JacobiJournal.com – FRESNO, Calif. — American Labor Alliance Execs: After a 19-day trial, a federal jury convicted three Fresno defendants of orchestrating a sweeping fraud involving fake pension plans, bogus workers’ compensation coverage, and sham hardship exemptions. U.S. Attorney Phillip A. Talbert announced the verdict Tuesday. Marcus Asay, 68, Antonio Gastelum, 53, and their business—Agricultural Contracting Services Association, doing business as American Labor Alliance (ALA)—ran the schemes from 2011 through 2019, targeting thousands of workers and businesses across the country. Fraudulent Retirement Plan Misled Over 3,000 Workers Asay, founder and chairman of ALA, and Gastelum, who held multiple executive titles, convinced over 3,000 individuals to invest in a fake 401(k) retirement plan. Instead of managing the funds properly, the defendants funneled contributions into personal and business expenses. This included luxury dining, rare coins, online companion services, and rent for Asay’s lakefront home in Fresno. American Labor Alliance Execs To conceal the misappropriation, the defendants used funds from another fraudulent operation—fake workers’ compensation coverage—to cover supposed pension obligations. Losses from the retirement scheme exceeded $750,000. Workers’ Compensation Scam Involved Fake Insurance Certificates The second scheme involved false promises of workers’ compensation coverage. ALA told customers in California and other states that major national insurers backed their policies. In reality, those insurers were never involved. To maintain the illusion, ALA issued counterfeit certificates and policy declarations, allowing businesses to submit fraudulent documents to clients and regulators. When investigations began, ALA urged customers not to cooperate with authorities. The total fraud in this area exceeded $2.25 million. Hardship Exemptions Sold Under False Pretenses Asay and ALA also ran a third grift by charging individuals for bogus exemptions from the Affordable Care Act’s insurance mandate. While they promised to shield buyers from the ACA’s shared responsibility payment, the exemptions were neither valid nor legal. Only government agencies can issue such exemptions—and they’re free for qualified individuals. Sentencing and Potential Penalties The three defendants face sentencing on October 21, 2024, before U.S. District Judge Dale A. Drozd. Each fraud conviction carries up to 20 years in prison, with fines ranging from $250,000 to $500,000 per count. ALA could be fined up to $8.5 million. The case was investigated by multiple federal agencies, including the FBI, IRS Criminal Investigation, and Department of Labor, with prosecution led by Assistant U.S. Attorneys Michael Tierney, Joseph Barton, and Stephanie Stokman. 🔗 Source: U.S. Department of Justice – DOJ Press Release Read More from JacobiJournal.com 💼 Stay informed about major fraud cases and workers’ compensation enforcement at JacobiJournal.com.
Former Girardi Keese Accountant Sentenced for Fraud
Former Girardi Keese Accountant: Kamon ordered to pay nearly $9M in restitution for role in law firm’s collapse April 15, 2025 | JacobiJournal.com A former top accountant at the now-defunct Girardi Keese law firm has been sentenced to over 10 years in prison for defrauding both the firm and its clients. The ruling delivers a sharp blow to those involved in one of California’s most notorious legal scandals. Court Sentences Kamon to Over 10 Years Christopher Kazuo Kamon, 51, received a 121-month federal prison sentence from Judge Josephine L. Staton. The court also ordered him to pay nearly $9 million in restitution. Authorities arrested Kamon in The Bahamas in late 2022. He later pleaded guilty to two counts of wire fraud in October 2024. Judge Staton called Kamon a central player in a “web of deceit and manipulation.” She emphasized that his actions deepened the harm inflicted on vulnerable clients. Millions Stolen from Settlement Funds Kamon worked alongside Tom Girardi, 85, to steal from injured clients over a decade. One of the worst cases involved a burn victim from the 2010 San Bruno gas pipeline explosion. Girardi had secured a $53 million settlement. However, he told the client it was only $7 million. Rather than protect the client’s funds, Kamon helped reroute the money to cover law firm expenses. He and Girardi also used it to pay previous victims whose own settlements had already been misappropriated. To keep the deception going, they sent small “interest” checks and false updates about nonexistent accounts. Kamon Profited from the Scheme Kamon didn’t just help embezzle funds—he also used the firm’s money to enrich himself. He set up fake vendors and submitted fraudulent invoices to pay for renovations at his homes in Encino and Palos Verdes. In one outrageous move, he funneled hundreds of thousands of dollars to a female companion, including a $20,000 monthly stipend. She had no ties to the law firm. These payments came directly from the firm’s operating accounts. Kamon’s Actions Accelerated the Firm’s Collapse Federal officials said Kamon’s misconduct helped accelerate the law firm’s downfall. Girardi Keese filed for bankruptcy in December 2020 and dissolved by early 2021. The State Bar of California disbarred Girardi in July 2022. A jury recently found him guilty of multiple counts of wire fraud. Meanwhile, Kamon, Girardi, and former Girardi Keese lawyer David R. Lira now face a second criminal trial in Chicago this July. Federal Authorities Vow Continued Accountability U.S. Attorney Bill Essayli stated, “Kamon enabled Girardi’s scheme for nearly 20 years. Ironically, his own lies helped bring it to an end.” IRS Special Agent Tyler Hatcher added, “Kamon treated the firm’s finances like a personal piggy bank. Our teams traced every dollar and helped bring him to justice.” The IRS Criminal Investigation Division and the FBI led the investigation. Prosecutors continue to recover assets for victims of the scheme. 🔗 Source: U.S. Department of Justice Read More from JacobiJournal.com 💼 For ongoing legal coverage and insights, visit JacobiJournal.com
Jury Awards $145M for Unreasonable Denial of Comp Claim
Jury Awards $145M: Insurance company held accountable for denying worker’s legitimate claim April 14, 2025 | JacobiJournal.com – A California jury has awarded $145 million to a worker after determining that his workers’ compensation claim was wrongfully denied by his employer’s insurance company. The ruling highlights the financial consequences that insurers face when denying legitimate claims in bad faith. Case Background The worker, employed in construction, suffered serious injuries after falling at his worksite. His workers’ compensation claim was submitted in accordance with California law but was rejected by the insurance company, which cited insufficient evidence of injury severity. As a result, the worker had to pay for his medical treatments out of pocket, leading to financial and emotional distress. Legal Ruling and Jury’s Decision After a lengthy trial, the jury ruled that the insurance company acted in bad faith by unreasonably denying the claim. The jury found that the insurer’s actions caused undue hardship for the worker, who had no alternative for covering medical expenses and lost wages. Jury Awards $145M “This ruling sends a strong message to insurers that they cannot deny legitimate claims without facing serious consequences,” said the worker’s attorney. “This award speaks to the harm caused by bad faith actions in workers’ compensation claims.” Broader Implications for Insurers This landmark case is expected to set a significant precedent for future workers’ compensation lawsuits in California. Legal experts suggest that insurers will now face heightened scrutiny regarding their claim review processes. The verdict underscores the importance of ensuring timely and fair compensation for workers injured on the job. For more insights into workers’ compensation law and similar cases, visit our workers’ compensation section. Read More from JacobiJournal.com 📰 Stay informed on the latest in workers’ compensation law and insurance cases at JacobiJournal.com. 🔗 Source: Legal News Network
Labor Organization Owners Sentenced in Union Fraud Scheme
Labor Organization Owners Sentenced: Federal court sends clear message in white-collar embezzlement case April 14, 2025 | JacobiJournal.com – TTwo Southern California labor organization owners will serve time in federal prison after admitting to a fraud scheme that embezzled more than $500,000 in union funds. This case marks another aggressive move by federal authorities to confront white-collar corruption in labor institutions. Fraud Scheme Diverted Union Funds for Luxury and Travel According to the U.S. Department of Justice, the defendants ran a labor nonprofit allegedly dedicated to protecting workers’ rights. However, investigators uncovered that the organization was used as a front to finance personal luxuries. They diverted funds toward extravagant travel and high-end purchases, betraying the trust of union members in the process. Labor Organization Owners Sentenced Falsified Invoices and Shell Companies Used to Conceal Theft To mask the scheme, the pair falsified financial records, created fake invoices, and routed money through shell companies. These tactics were aimed at avoiding detection while continuing to misuse union funds. Prosecutors emphasized the significance of the betrayal, noting that such actions undermine confidence in legitimate labor movements. Federal Sentencing Underscores Severity Following a thorough investigation and prosecution, both individuals received multi-year federal prison terms and were ordered to pay restitution. The court’s decision sends a firm message: those who exploit positions of public trust, especially within labor organizations, will face serious consequences. Heightened Scrutiny for Union Oversight This case is part of a broader federal effort to increase oversight of labor organizations. As government agencies ramp up enforcement, unions are being urged to adopt tighter compliance measures and improve financial transparency. 📌 Employers and union representatives should review internal controls regularly to avoid costly liability or legal exposure. Read More from JacobiJournal.com: 🔍 Stay informed about union fraud, compliance enforcement, and insurance-related legal actions at JacobiJournal.com. Subscribe for updates that matter to employers, investigators, and compliance professionals.
Ohio BWC Recoups Nearly $4K After Fraud Investigation
COLUMBUS, OH – Ohio BWC Recoups: The Ohio Bureau of Workers’ Compensation (BWC) recently recovered $3,816 in restitution from a Columbus resident who pleaded guilty to one count of workers’ compensation fraud. Investigation Begins After Tip The BWC’s Special Investigations Department (SID) launched an investigation after receiving a tip that the woman was working while also collecting BWC disability benefits. Woman Worked for Multiple Employers While Receiving Benefits The investigation revealed that the woman had worked for four different employers while collecting benefits she wasn’t entitled to. Guilty Plea and Full Restitution Recovered Ohio BWC Recoups: On February 19, 2025, she pleaded guilty to a first-degree misdemeanor. The judge acknowledged that the BWC had already recovered the full restitution amount of $3,816. Protecting the State Insurance Fund SID, a criminal justice agency within the BWC, continues to pursue individuals who defraud the workers’ compensation system. By doing so, it protects the State Insurance Fund and ensures that benefits remain available for injured workers who genuinely need them. Source: 🔗 Ohio BWC Newsroom – Fraud Investigation Restitution 📚 Read More on Insurance & Tax Fraud Cases Explore more fraud investigations at JacobiJournal.com
Three Floridians Plead Guilty in Workers’ Comp, Tax Fraud Scheme
JACKSONVILLE, FL — Three Floridians Plead Guilty: Three Orlando residents have pleaded guilty to federal charges in a sweeping fraud scheme that evaded tens of millions of dollars in workers’ compensation insurance premiums and payroll taxes, according to federal prosecutors. Plea Agreements and Potential Sentences Eduardo Anibal Escobar, Carlos Alberto Rodriguez, and Adelmy Tejada, all legal permanent residents from El Salvador, admitted to conspiring to commit wire fraud and tax fraud. Each defendant now faces up to 20 years in prison for the wire fraud charge and up to 5 years for the tax fraud offense. Three Floridians Plead Guilty As part of the plea deal, the court ordered the trio to forfeit $8.76 million in profits and two Orlando homes purchased with illicit funds. Additionally, they must pay restitution totaling: How the Scheme Operated Beginning in January 2015 and continuing through August 2024, the defendants carried out a complex scheme to defraud the insurance system and the IRS. They registered shell companies with the State of Florida, secured workers’ compensation policies that listed only a few employees and minimal payroll, and then falsely claimed to employ hundreds of subcontractors. To execute the scheme, the trio partnered with construction subcontractors who needed insurance coverage. These subcontractors, often employing undocumented workers, paid the defendants to falsely represent that the workers were on their payroll. In return, the defendants provided documents to general contractors claiming the workers were insured through their companies. As a result, the general contractors issued checks to the defendants’ shell companies. The trio then distributed the funds to the subcontractors’ workers—while keeping 6% to 8% in fees. The Financial Impact Over the course of the scheme, approximately $146 million in payroll flowed through the defendants’ companies. However, they failed to report this payroll to the IRS and avoided paying the associated taxes. Had they reported it properly, they would have owed nearly $37 million in payroll taxes. Furthermore, insurance companies believed they were covering only the limited payroll amounts reported on the applications. In reality, they unknowingly provided coverage for the much larger unreported payroll, missing out on an estimated $13 million in premiums. Ongoing Federal Crackdown This case forms part of a broader federal effort targeting fraud in the construction industry, particularly the use of “ghost” employees and shell companies. The investigation was led by Homeland Security Investigations, IRS-Criminal Investigation, and the Florida Department of Financial Services. Assistant U.S. Attorney Arnold B. Corsmeier is prosecuting the case, while Jennifer M. Harrington is handling asset forfeiture. Although the sentencing dates have not yet been set, authorities emphasized that similar investigations remain ongoing. 📚 Read More on Insurance & Tax Fraud Cases Find more breaking stories at JacobiJournal.com