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9 in construction industry indicted in fraud, tax case The San Diego Union-Tribune November 22, 2003, Saturday
Copyright 2003 The San Diego Union-Tribune
The San Diego Union-Tribune
November 22, 2003, Saturday
SECTION: ZONE;Pg. NC-2; NI-1
LENGTH: 292 words
HEADLINE: 9 in construction industry indicted in fraud, tax case
BYLINE: Matthew T. Hall; STAFF WRITER
BODY:
Nine owners and employees of three Southern California construction companies, including two
North County firms, have been indicted in a scam involving tax evasion and workers' compensation fraud, the District Attorney's
office said yesterday.
Prosecutors said two owners and an employee
of Gauthier Construction in Carlsbad, an owner and two employees of JVLM Construction in Palm Springs and a seventh person
tied to both companies were charged with workers' compensation insurance premium fraud and payroll tax evasion.
Two owners of C&H Framing in Escondido, who were indicted in May on charges of workers'
compensation insurance premium fraud and payroll tax evasion, were charged with state income tax fraud, prosecutors said.
Deputy District Attorney Ernie Marugg said in each case, a middleman was paid the company's entire payroll plus a 20 percent commission. Marugg said
the middleman then paid the employees cash wages and kept the commission as his payment, so the wages were never reported
to authorities such as the Franchise Tax Board or the workers' compensation insurance carrier.
By doing so, the companies avoided paying taxes on the money, officials said.
"It's something that we've found going on a lot in the construction industry and . . . it's
costing the people of the state of California a lot of money," Marugg said.
Marugg
said the companies themselves were not charged. Each defendant faces at least five years in prison.
An owner of the Carlsbad company said his attorney told him to decline comment yesterday. An
employee at the Escondido company said the owners weren't available. The Palm Springs company could not be reached for comment.
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