Bug Killer Zapped for Insurance Fraud

The California Department of Insurance is trumpeting the arrest of the owner of a janitorial and pest control company on multiple counts of suspected workers’ compensation insurance premium fraud.

Teresa Reif, 31, president of San Mateo, Calif.-based Genesis Building Services Inc. was arrested in San Mateo County after surrendering to the Redwood City Police Department. The arrest stems from workers’ compensation insurance Genesis purchased through Redwood Fire & Casualty Insurance Co. (Redwood) and the State Compensation Insurance Fund (SCIF).

The department alleges Genesis misrepresented both the number of employees working at the company and its payroll when they applied for their workers’ compensation insurance, while they were insured, and during the annual audits that were conducted by the insurance carriers.

The CDI Fraud Division began an investigation in 2008 after Redwood suspected Genesis of under-reporting its payroll. While insured by SCIF and Redwood (March 8, 2005 through March 8, 2009), Genesis allegedly under-reported $10,567,776.69 in payroll. It is alleged that Teresa Reif avoided paying a total of $2,957,089.20 in insurance premium through fraudulent activity.

“Business owners should be on notice, egregiously under-reporting wages to avoid premium payments will not go unpunished,” California Insurance Commissioner Dave Jones said in a statement. “These violations will be fully investigated by my Department.”

Reif was released on her own recognizance, but could face up to five years in prison and/or a $50,000.00 fine if convicted.