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Institute of Management Accountants

Institute of Management Accountants. Student Night at the Spectrum. Premium Fraud & Tax Evasion. BONNIE M. DUMANIS District Attorney. By. DOMINIC I. DUGO Chief, Insurance Fraud Division San Diego County District Attorney’s Office dominic.dugo@sdcda.org (619) 685-6534. JESSE NAVARRO

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Institute of Management Accountants

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  1. Institute of Management Accountants Student Night at the Spectrum

  2. Premium Fraud & Tax Evasion BONNIE M. DUMANIS District Attorney By DOMINIC I. DUGO Chief, Insurance Fraud Division San Diego County District Attorney’s Office dominic.dugo@sdcda.org (619) 685-6534 JESSE NAVARRO Director of Community Relations San Diego County District Attorney’s Office jesse.navarro@sdcda.org (619) 531-3053 SD Chapter of the Institute of Management Accts. October 14, 2013

  3. Mission Statement The employees of the San Diego District Attorney, in partnership with the community we serve, are dedicated to the pursuit of truth, justice and protection of the innocent, and the prevention of crime through the vigorous and professional prosecution of those who violate the law.

  4. San Diego County District Attorney’s Office District Attorney Bonnie Dumanis Assistant District Attorney Jesse Rodriguez 330 W. Broadway, Suite 1300 San Diego, CA 92101 (619) 531-4040 www.SanDiegoDA.com PublicAffairs@sdcda.org

  5. Public Safety Topics • District Attorney’s Office Mission & Responsibilities • Juvenile Justice & Criminal Court System • Anti-Bullying in Schools & Cyber-Bullying Prevention • Child Abduction & Child Abuse Prevention • Internet Crimes Against Children & Adolescents • Elder Abuse • Domestic Violence & Restraining Orders • Hate Crimes

  6. Public Safety Topics • Gang Prevention & Enforcement • Narcotics Prevention & Enforcement • Driving Under the Influence & Consequences • Social Host Law/Underage Drinking & Consequences • Check Enforcement Program & Embezzlement • Identity Theft & Consumer Protection • Real Estate, Immigration & General Fraud • Worker’s Compensation, Employer & Employee Fraud

  7. San Diego County District Attorney’s Office Contact for Public Safety Topics: Jesse Navarro, Director of Community Relations 330 W. Broadway, Suite 1300 San Diego, CA 92101 (619) 531-3053 www.SanDiegoDA.com

  8. USAINSURANCE FRAUD$80-$90 Billion a Year

  9. USATAX EVASION #1 Economic Crime followed by Insurance Fraud

  10. CAL. INSURANCE FRAUD $15 Billion a Year. Tax of $500 per Person.

  11. Income Tax Evasion $6.5 Billion (FTB) CALIFORNIA

  12. Underground Economy $100 Billion Annually $5 Billion of Payroll Tax Loss CALIFORNIA

  13. CAL. WORKERS’ COMPENSATION FRAUDEst. $4 Billion per Year

  14. OUTLINE • San Diego’s IF Division • Deterrence Program • Premium Fraud and Tax Evasion

  15. II.San Diego Insurance Fraud Division Grant Funded Units Workers’ Compensation Fraud Auto Theft Auto Insurance Fraud Disability, Healthcare Fraud Life Insurance Fraud Staff 16 Attorneys 15 Investigators 8 Paralegals 10 Support Staff

  16. 2012 - 2013 Workers’ Comp San Diego Prosecutions: 115 Convictions: 121 Investigations: 516

  17. II.San Diego’s Deterrence Program Billboards Posters Movie Ads Ethnic Newspapers Chambers of Commerce TV Ads

  18. Billboard Ads, 2009 & 2012 81 Billboards 4 to 6 Weeks 1 Million People a Day

  19. Billboard

  20. Billboard

  21. Billboard

  22. Billboard

  23. Billboard

  24. Billboard

  25. Anti-Fraud Posters, 2009-2013 200,000 English/Spanish/Chinese Numerous Employers

  26. Workers’ Comp Poster

  27. Movie Theater Ads, 2010 340 Movie Screens 1 Month 1 Million People

  28. Workers’ Comp Movie Ad

  29. Ethnic Newspapers, Anti-Fraud Ads, 2011-2013 Spanish Chinese Vietnamese Filipino Arabic African American

  30. Brochures, 2008-2013 Mailer- 180,000 Journal Inserts- 16,000 Mailer- 185,000

  31. TV Media – 2012 - 2013

  32. Television PUBLIC SAFETY ANNOUNCEMENT (PSA) 13 Television Stations English/Spanish/Vietnamese 2,000 PSAs

  33. Radio Media – 2012-2013 KLQV 102.9 FM KLNV 106.5 FM Word Syndicated Radio

  34. III. PREMIUM FRAUD • False statement • Intent to reduce proper rate or cost of workers’ comp insurance

  35. Insurance Companies & State Losing Billions $ Premium Fraud & Tax Evasion

  36. San Diego Premium FraudTask Force Summer 1996

  37. Task Force Members San Diego DA CDI Franchise Tax Board Labor Commissioner Contractors’ Licensing Board Employment Development Department

  38. 2007 Berkley Study Fraud 19% to 23% (2002) $3.2 to 3.8 Billion in lost premium. 75% of Payroll in high risk not reported.

  39. 2007 Berkley Study Conclusion: NASCAR saying “If you ain’t cheatin, you ain’t tryin.”

  40. 2007 New York Study Fraud 15% to 20% $500 million to $1 billion in lost premium.

  41. Boston Big Dig Tunnel Workers Reported to Carrier as Clerical. Loss: $11 million

  42. Workers’ Compensation Required of Employers • Coverage SCIF or Private Carrier

  43. Workers’ Comp Premium Payroll x Class Rate x Experience Modification

  44. PAYROLL x CLASS RATE x EXP. MOD $300,000 x 10% ($10 per $100) x 1 = $30,000 Landscaper

  45. PAYROLLx CLASS RATE x EXP. MOD $100,000x 10% ($10 per $100) x 1 = $10,000 Landscaper $300,000 x 10% ($10 per $100) x 1 = $30,000

  46. PAYROLL x CLASS RATEx EXP. MOD $300,000 x 40%($40 per $100) x 1 = $120,000 Tree trimmer $300,000 x 10% ($10 per $100) x 1 = $30,000 Landscaper

  47. PAYROLL x CLASS RATE x EXP. MOD $300,000 x 10% ($10 per $100) x 2=$60,000 Landscaper $300,000 x 10% ($10 per $100) x 1 = $30,000

  48. Three Types of Premium Fraud • Underreport Payroll • Cash Pay • Independent Contractors • Labor paid in Rent, Vehicle, Supplies

  49. Three Types of Premium Fraud 2. Misclassification a. Type of Work landscaper v. tree trimmer janitor v. roofer clerical v. construction b. Hourly Wages (Dual Wages) Concrete over $24 hr. Carpentry over $26 hr. Plastering over $25 hr. Roofing over $23 hr.

  50. Three Types of Premium Fraud 3. X-Mod Evasion a. Identity Change Same Company, change name b. Fail to Report Injuries Injured workers not provided WC Benefits.

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