Worst Case Scenario

Construction worker has an accident while working

Today’s “Fraud of the Day” article is sobering because it is an example of a worst case scenario of what happens when a business owner neglects to carry workers’ compensation insurance. The owner of a California construction company that helped fight back the Soberanes Fire in 2016 is now being held responsible for compensating the family of a worker who died from an on-the-job accident. When investigators from the Monterey County District Attorney’s Office delved into the accident, they found that the construction company owner had a history of workers’ compensation fraud and tax fraud.

The construction company owner had a lucrative contract with Cal Fire, also known as the California Department of Forestry & Fire Protection. (Cal Fire and the State of California require that any contractors they work with have workers’ compensation coverage for their employees.)

When the fire broke out, the construction company owner hired a 35-year-old man to operate a bulldozer. Unfortunately, while fighting the fire that burned down more than 132,000 acres in Monterey County and Los Padres National Forest, the man was killed when the bulldozer he was operating overturned.

As investigators with the Monterey County District Attorney’s Office opened an investigation into the death, they discovered that the construction company owner neglected to register his business with the California Employment Development Department. Neither did he cover his employees with workers’ compensation insurance. It also turns out that the Monterey County business owner not only filed a false insurance document with his customer, but he also neglected to file payroll tax returns with the Employment Development Department and did not withhold payroll taxes from his employees’ wages. (His crimes are stacking up.)

Get this – the 34-year-old construction company owner pleaded not guilty to all the charges against him. (He also waived the right to a jury trial, which meant the court would decide the case.) When the court weighed in, the judge found the business owner guilty of tax fraud and workers’ compensation fraud. When sentenced, he will face four years and eight months in prison and restitution to the deceased employee’s family. Failing to file payroll tax returns with the intent to evade taxes could add another three years and a $20,000 fine.

Workers’ compensation not only provides injured employees with adequate medical coverage and other benefits, it also protects a business owner from being sued. While the injury that related in the employee’s death in today’s case may not have been prevented, the employee’s family could have been compensated for their loss if the employer had paid his insurance premiums. Now it looks like he will have to pay for his crimes by serving time behind bars and may even lose his company. (That’s not the worst thing. The family of the deceased employee includes a wife and two young children. They not only have to deal with the loss of their loved one, but their future is reliant upon the outcome of the judge’s decision.)

Today’s “Fraud of the Day” is based on an article, “Judge finds business owner guilty of fraud after death of bulldozer operator during Soberanes Fire,” published by the Monterey Herald on October 18, 2019.

SALINAS — Judge Andrew Liu on Thursday found Ian Nathaniel Czirban guilty of payroll tax evasion, submitting false documents to Cal Fire and failing to carry workers’ compensation insurance following the death of Robert Reagan III during the Soberanes Fire.

Czirban, owner of Czirban Concrete Construction, hired Reagan to operate a bulldozer at the wildfire. Reagan, 35, died July 26, 2016, when the bulldozer overturned and rolled down an embankment as he helped battle the Soberanes Fire. The fire took almost three months to contain and devoured more than 132,000 acres in Monterey County and Los Padres National Forest.

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Larry Benson, Senior Director of Strategic Alliances, LexisNexis Risk Solutions - Government

Larry Benson is responsible for developing strategic partnerships and solutions for the government vertical. His expertise focuses on how government programs are defrauded by criminal groups, and the approaches necessary to prevent them from succeeding.

Mr. Benson has 30 years of experience in sales and business development. Before joining LexisNexis® Risk Solutions, he spent 12 years founding and managing two software technology startups. During the 1990s he spent 10 years as a Regional Director helping to grow a New England-based technology company from 300 employees to 7,000. He started his career with Martin Marietta Aerospace working on laser guided weapons and day/night vision systems.

A sought-after speaker and accomplished writer, Mr. Benson is the principal author of “Fraud of the Day,” a website dedicated to educating government officials about how criminals are defrauding government programs. He has co-authored WTF? Where’s the Fraud? How to Unmask and Stop Identity Fraud’s Drain on Our Government, and Data Personified, How Fraud is Changing the Meaning of Identity.

Benson holds a Bachelor of Science in Physics from Albright College, and earned two graduate degrees – a Master of Business Administration from Florida Institute of Technology, and a Master of Science in Engineering from Lehigh University.