SACRAMENTO, Calif. (KTXL) — A Rancho Murieta business owner is behind bars for workers’ compensation fraud after allegedly costing his insurer $50, 000, according to the California Department of Insurance.
Department officials said 65-year-old Herbert Allen Kelly III was arrested Friday after allegedly underreporting the payroll and number of employees for his business, Kelly Roofing Company.
“When business owners operate in the underground economy, they are cheating the system and create an unfair advantage that puts legitimate businesses at risk,” said Insurance Commissioner Ricardo Lara in a released statement.
Insurance detectives said the alleged fraud was discovered after one of Kelly’s employees slipped and fell off a roof about 25 feet high on January 12, 2015, and a workers’ compensation claim was filed with Kelly’s insurer, State Compensation Insurance Fund.
According to officials, the claim resulted in SCIF paying about $730,175 in medical and disability payments to date.
During a SCIF annual audit of Kelly Roofing Company in 2015, when the accident happened, the audit revealed Kelly reported he had no employees and $0 in payroll between 2014 and 2018, according to investigators.
When insurance detectives searched Kelly Roofing Company’s bank accounts, they discovered Kelly did have up to 15 possible employees during the time period he claimed he had zero employees, according to investigators.
Officials said the audited payroll was forwarded to SCIF, who determined Kelly Roofing Company owed about $50,000 in unpaid past premiums.