FRESNO — Ceres resident indicted with others in farm labor benefits scam
A federal grand jury has indicted nearly two dozen people, including a Ceres resident, suspected of participating in a fraudulent unemployment and disability benefits scheme based in Sutter County, the U.S. attorney's office in Sacramento announced Tuesday.
This is the third indictment in an ongoing investigation. Six defendants were indicted in May, and six others were indicted in September.
The first indictment alleges that Mohammad Nawaz Khan, Mohammad Adnan Khann and Iqila Begum Khann, all of Live Oak, and Mohammad Shahbaz Khann of Yuba City controlled a series of companies reported to the state Employment Development Department as farm labor contractors.
Federal prosecutors said they sold fake pay stubs to others to fraudulently claim unemployment and disability benefits.
Over the course of the scheme, the defendants reported wages for more than 400 people that resulted in more than 2,000 fraudulent claims of more than $5 million, according to prosecutors.
The most recent indictment, which was unsealed Tuesday, identifies those suspected of buying the phony pay stubs, which include Mo Pegany, 56, of Ceres.
The indictment alleges that Pegany and eight other defendants paid $250 for every $1,000 in wages listed in the phony pay stubs. Pegany's co-defendants are residents of Yuba City and Roseville.
"Fraud against the employer-funded Unemployment Insurance program or the employee-funded Disability Insurance program costs all of us and will not be tolerated," said Pam Harris, the director of the Employment Development Department, in a news release.
If convicted, the defendants face a maximum sentence of 20 years and a $250,000 fine for each count.