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By Robert Warne - November 8, 2002Across the state, district attorneys are cracking down hard on an underground economy that operates off the radar screen of authorities. The effort to curb operations that pay employees under the table to avoid taxes, workers’ compensation and other benefits is making some headway.
Two cases in California have recently produced jail time and stiff fines for certain parties involved in such backdoor business practices.
In Los Angeles County, authorities took a janitorial agency known by three names to the cleaners, Nov. 4. The owners’ method of operation was to hire illegal or immigrant labor, pay below minimum wage and clean up by not paying taxes, benefits or workers’ compensation.
Owner Jaime Huerta and co-owner, girlfriend Micaela Escovedo pleaded no contest to 11 charges. Huerta was sentenced to 16 months in jail and Escovedo nine months. Also, supervisor Jose Berumen was sentenced to 120 days in jail.
The company’s bookkeeper and insurance broker Diana Armenta faces charges as well.
The company was ordered to pay a total of $901,608 in restitution to be dispersed among the state Employment Development Department, two insurance companies and seven employees.
In LA County alone, a study conducted by a public policy research agency found that 1.5 million workers are paid under the table, which is estimated to short change social security, workers’ compensation and health insurance by about $1.1 billion.
Up north, the Sacramento County District Attorney’s Office locked up two women for running a leaky roofing operation, Oct 31. Janet Gudgel of Gudgel Roofing was also ordered to pay $682,222 to State Compensation Insurance Fund, $45,288 to CalComp and $79,312 to CNA Insurance.
Gudgel and Kimberly Volk were charged with underreporting payroll to the carriers for nine years.
By underreporting payroll, crooked operations not only take advantage of employees and insurers, but they also rob taxpayers, consumers and other legitimate companies of billions of dollars each year. |
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