April 24, 2025 | JacobiJournal.com — A janitorial services owner was sentenced to 270 days in county jail and two years of formal probation after pleading no contest to insurance fraud and tax evasion. The conviction underscores the growing scrutiny on small business operators in the cleaning and maintenance sector, where accurate payroll reporting and tax compliance are essential to fair competition.
Martha Toro, who owns MT Janitorial Services, will also pay $1,454,130 in restitution, fines, and interest. Of that amount, Markel Insurance will receive $848,370 to cover the losses sustained through underreported payroll, while $605,760 will go to the Franchise Tax Board (FTB) for unpaid taxes. This case demonstrates how fraudulent conduct in the janitorial services industry can result in severe legal consequences and substantial financial penalties.
Years of Payroll Fraud Exposed
Janitorial Services Owner Sentenced: Investigators began looking into Toro’s business in February 2020 after Markel Insurance raised concerns. They discovered Toro had intentionally underreported her number of employees from 2013 to 2020 to lower her workers’ compensation premiums.
This fraud caused Markel Insurance to lose over $800,000. Meanwhile, Toro also falsified her state tax returns from 2016 to 2020, avoiding hundreds of thousands in taxes.
Investigators Respond Swiftly
The California Department of Insurance (CDI) led the investigation with assistance from the Franchise Tax Board. Their coordinated efforts confirmed that Toro misrepresented payroll information year after year, creating a pattern of deception that significantly impacted the janitorial services sector.
According to the CDI, underreporting payroll not only defrauds insurers but also endangers workers—especially if they are injured on the job without proper insurance coverage. In industries like janitorial services, where employees often face physical risks from cleaning chemicals, heavy equipment, and demanding schedules, the absence of adequate coverage can leave injured workers without medical support or wage replacement. This case highlights the importance of strict compliance and oversight in protecting both employees and the public.
Tax Fraud Harms the Public
Beyond insurance losses, Toro’s actions harmed California taxpayers. “Tax evasion threatens essential public services,” the FTB said. “By shutting down underground economic activity, we protect resources for education, healthcare, and infrastructure.”
In this case, the fraudulent practices tied to the janitorial services industry not only deprived the state of critical tax revenue but also weakened the competitive landscape. When companies like MT Janitorial Services skirt tax laws, they avoid paying into the very systems that maintain public resources. Over time, these unethical actions can lead to reduced funding for community programs, strained government budgets, and diminished trust in local businesses.
Fraud Creates Unfair Business Advantages
Deputy District Attorney John MacKenzie, who prosecuted the case, highlighted how such fraud distorts the marketplace. “Toro gained an unfair edge by lowering her business costs illegally,” he said. “This hurts honest employers who follow the rules and puts customers at risk.”
Because Toro’s business appeared cheaper, it won contracts at the expense of law-abiding competitors. Over time, this undermines trust and damages entire industries.
Source: CDI
FAQs: Janitorial Services Owner Fraud Case
What led to the janitorial services owner being sentenced?
Investigators found that the owner underreported payroll for years, defrauding an insurer and evading state taxes.
How much did the janitorial services owner have to pay in restitution?
The court ordered over $1.45 million in restitution, with payments to Markel Insurance and the California Franchise Tax Board.
Why is payroll fraud harmful to honest businesses?
It gives fraudulent companies an unfair cost advantage, undermining competitors who follow legal and ethical rules.
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