KING CITY — Monterey County Judge Rafael Vasquez has sentenced King City residents and farm labor contractors Elias Perez Jr., 43, and Alejandra Perez, 40, to three years in prison for insurance fraud committed between 2013 and 2017.
Vasquez also suspended those prison sentences, placing each defendant on seven years felony probation subject to a variety of conditions.
The defendants, who are brother and sister, are corporate officers for Future Ag. Management Inc. and Future Harvester and Packers Inc. Since 2013, those companies have operated as farm labor contractors under California and federal licensing laws. The two companies have employed as many as 1,500 farmworkers at any one time.
As employers, the defendants are required to maintain workers’ compensation insurance to ensure injured workers have access to medical care, disability and other benefits. Between 2014 and 2016, the defendants’ businesses were the subject of federal and state investigations involving wage and hour violations. Those investigations concluded with the payment of fines and compliance agreements.
The criminal case originated in July 2016 when an injured worker complained that her supervisor refused to take her to a doctor and forced her to be treated by an unlicensed healthcare worker. The California Department of Insurance began investigating the defendants’ workers compensation insurance policies as well as their bank records.
Forensic auditors determined that the defendants provided their insurance companies with false payroll reports to conceal their actual payroll and obtain a reduced premium. Through search warrants, investigators obtained and analyzed the defendants’ bank accounts and found that they had underreported their payroll for 2013 and 2017 by $17,397,790. By doing so, they paid far less premium than what was owed.
Under California criminal law, making a material misrepresentation to obtain a lower workers’ compensation insurance premium has a maximum penalty of five years and a fine of up to double the amount of the fraud. In addition, investigators uncovered evidence that Elias Perez Jr. instructed one of the company’s supervisors to deny at least three injured workers with access to workers’ compensation benefits.
On Nov. 10, 2020, the Monterey County District Attorney filed felony fraud charges against the defendants. Even after the case was filed, investigators continued to uncover evidence of felonies committed by them.
Specifically, the investigators determined that the defendants had submitted falsified paychecks to the U.S. Department of Labor during that agency’s 2015 investigation into wage and hour violations. It is a felony to file a falsified document with a public agency. As a result of this discovery, the District Attorney added additional felony charges on July 18, 2022.
“My office is committed to prosecuting businesses and individuals who engage in predatory and fraudulent practices, particularly where such practices deny employees with access to mandated benefits,” stated Monterey County District Attorney Jeannine Pacioni in announcing the sentence. “We are working in collaboration with the California Department of Insurance and the Labor Commissioner to ensure that these businesses are identified and prosecuted to the full extent of the law.”
On June 29, 2023, both defendants pleaded guilty to two felony counts of insurance fraud. At the Nov. 3 sentencing, Judge Vasquez imposed three-year prison sentences on each defendant. Vasquez then suspended execution of those prison terms and placed the defendants on seven years of felony probation.
As part of probation, they will serve 210 days in county jail and pay restitution in the amount of $633,786. In addition, Vasquez has the authority to revoke the farm labor contractor licenses for the defendants and their corporations if they violate probation in a manner that affects the health, safety or workplace conditions of their employees.
“Every employee deserves to go to work feeling safe and confident that they will be protected if an accident occurs,” stated California Insurance Commissioner Ricardo Lara. “These employers chose to sacrifice the safety of their workers to illegally increase their own profits. This conviction serves as a reminder to all employers that they must follow the law and they must make their employees a priority. Thanks to the hard work of our detectives and the Monterey County District Attorney’s Office these dishonest business owners have been stopped.”
California Labor Commissioner Lilia Garcia-Brower added, “This case represents effective government collaboration. Together we defined a path to recover restitution, bring business operations into compliance, and provide a mechanism for 1,500 workers to continue employment. I applaud my team, California Department of Insurance and the Monterey District Attorney for maximizing the impact of this enforcement action.”
Persons having information about suspected workers’ compensation fraud are encouraged to contact the District Attorney’s Office at 831-755-3224.