California Insurance Commissioner Steve Poizner announced the arrests of three individuals charged with 48 counts of workers' compensation insurance fraud, labor code violations and tax fraud.
Monica Mui Ung, 49, of Alamo; Joey Ruan, 31, of San Leandro; and Tin Wai Wu, 28, of Millbrae were arrested, with bail was set at $535,000 for each suspect.
CDI led the investigation, with assistance from the Employment Development Department. The investigation revealed that Ung owned and operated NBC General Contractors Inc., a general building contracting company. The company focused primarily on public works projects such as El Cerrito City Hall and Piedmont Elementary School. From May 2003 to May 2007, NBC was awarded at least 27 public works projects in Alameda, Contra Costa, San Francisco, San Mateo and Marin Counties.
The cost for NBC's workers' comp 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' comp 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' comp premiums.
By allegedly falsely reporting the type of work performed by employees and wages paid, NBC exposed the workers' comp insurer to additional risk and allowed the company to engage in unfair business practices by giving an advantage over employers who correctly reported their payroll and risk. Because public works projects are typically awarded to the lowest bidder, the alleged fraud gave NBC a significant advantage over competitors. This alleged false reporting resulted in a total loss of premiums of more than $1.45 million.
Additionally, investigators allege that NBC did not pay overtime or sick leave to employees, as required under labor laws. These losses are estimated at $3.6 million in unpaid wages to 19 employees.