Owner of Modesto temp job agency is ordered to pay back nearly $1 million. Here’s why
The former owner of a Modesto temporary employment agency has been convicted of fraud and ordered to pay back nearly $1 million after underreporting about $4.9 million in payroll to get a lower workers’ compensation insurance premium from the state.
Michael Zendejas, 47, of Turlock was the owner and president of Trinity Personnel Inc., according to state officials. His agency provided temporary workers to cover absences, skill shortages and seasonal workloads for client companies.
Zendejas on Nov. 22 pleaded no contest to one count of felony insurance fraud, the Stanislaus County District Attorney’s Office announced in a news release. Three other counts of insurance fraud were dropped, according to court records.
Stanislaus Superior Court Judge Robert Westbrook sentenced Zendejas to 180 hours of community service and three years of probation. The judge also ordered Zendejas to pay about $944,000 in restitution to the State Compensation Insurance Fund.
The case was the result of a joint investigation by the California Department of Insurance and the Amador County Workers’ Compensation Fraud Unit, which investigates and prosecutes insurance fraud cases in Amador, Stanislaus, Calaveras and Tuolumne counties. The fraud unit is funded by a grant from the California Department of Insurance.
Last year, the same fraud unit secured a criminal conviction for the owner of another Modesto temp job agency who underreported her payroll to obtain a lower workers’ compensation insurance premium from the state. The convicted Denair woman also was sentenced to community service and probation time, and she was ordered to pay restitution of slightly more than $525,000.
Prosecutors said Zendejas also knowingly made false statements and provided fraudulent material to the State Fund to get a reduced premium rate.
Employers in California are required by law to have workers’ compensation insurance and submit payroll records to the State Fund showing the number of employees and their incomes. The information helps the State Fund set premium rates for workers’ compensation insurance for employers throughout the state.
Zendejas had a workers’ compensation policy from the State Fund from September 2014 through December 2016. Prosecutors said a State Fund audit of the policy discovered Zendejas underreported payroll and the number of employees, resulting in a loss of slightly more than $944,000 in insurance premiums.
“Businesses that illegally underreport payroll and employees create a competitive advantage that places honest businesses at risk,” state Insurance Commissioner Ricardo Lara said in a news release. “This joint investigation with Amador County levels the playing field, so honest employers have a chance to stay competitive and in the marketplace.”
Authorities ask anyone who suspects workers’ compensation fraud to call the state Department of Insurance Fraud Hotline at (916) 854-5700 or the Amador County District Attorney’s Office at (209) 223-6444.
This story was originally published December 11, 2019 at 5:00 AM.