Leshem to pay California $6.3M
There are 2 comments for this page [ View ]Tuesday, June 3, 2008
By SCOTT SCHWEBKE
Standard-Examiner staff
sschwebke@standard.net
Company pleads no contest to insurance fraud
LOS ANGELES -- A California company owned by Ogden developer Gadi Leshem pleaded no contest Monday to one count of insurance fraud and agreed to repay $6.3 million in workers' compensation premiums as part of a two-year-old criminal case.
Cover-All Inc., which installs carpeting and flooring as a subcontractor for such businesses as Home Depot, entered the plea before Los Angeles Superior Court Judge David Horwitz, Deputy District Attorney Michael O'Gara with the Healthcare Fraud Division said in a prepared statement.
As part of the plea agreement, Leshem, 61, agreed to personally repay the $6.3 million to the State Compensation Insurance Fund, O'Gara said.
Following the no-contest plea, a conspiracy charge and four counts each of insurance fraud were dismissed against Leshem; Zeev Golan, vice president of Cover-All; and his wife, Irit Golan, who served as the company's corporate secretary and payroll supervisor.
"Workers' compensation fraud costs taxpayers millions annually and hurts law-abiding employers," Los Angeles County District Attorney Steve Cooley said in a news release.
"This office has an excellent record in winning convictions and securing repayments for taxpayers."
O'Gara said Cover-All had underreported payroll to the State Compensation Insurance Fund since the inception of its policy in September 2001. An investigation was initiated by the State Compensation Insurance Fund's Special Investigation Unit.
Initially, investigators estimated the loss to the state at more than $10 million. After charges were filed in October 2006, audits put the total loss at $6.3 million.
Cover-All has corporate offices in Chatsworth, Calif., and at one time had 50 offices in 17 states.
In addition to running Cover-All, Leshem is involved in efforts to establish a Wal-Mart Supercenter at the northwest corner of 20th Street and Wall Avenue in downtown Ogden.
He has also proposed the construction of Ogden Renaissance Village, a commercial and residential development as part of the second phase of the Ogden River Project.
The Ogden Redevelopment Agency has granted exclusive transfer of at least 38 Ogden River Project property purchase options to Leshem.
The $6.3 million settlement, to be paid over several years, shouldn't affect the progress of the Wal-Mart and Ogden Renaissance Village projects, Alex Auerbach, a spokesman for Leshem, said Monday.
"Gadi is pleased to have this resolved and is looking forward to focusing on his operations in California and real estate projects in Utah and elsewhere," he said in a phone interview.
Leshem couldn't be reached for comment Monday regarding the settlement. Information regarding whether liens will be placed by the state of California on any of his Ogden properties was not immediately available.
Leshem said in a prepared statement that the worker compensation problems with the state of California arose because of Cover-All's rapid growth.
"This dispute involved complicated issues of putting our workers into the correct classification for workers' compensation insurance," he said. "In 2001, we had 325 employees working out of 16 service centers. By 2005, we had 1,500 employees in 55 service centers, in 16 states.
"Very often, we hired and trained people in California and then sent them to other states, as installers, administrators or managers. We were focused on delivering great service for consumers and our retailer partners, and creating good jobs for our rapidly growing team of employees.
"We accomplished all that, but we failed to properly comply with the complex requirements of our workers' compensation insurance plan as we moved our people around the country."
The $6.3 million settlement is in addition to about $2.8 million that Cover-All has already paid in workers' compensation for the years covered by the claims from the state of California, Leshem said.
The initial claim against Cover-All was for $11 million in additional premiums. When combined with the premiums already paid, that amount equals 46 percent of Cover-All's payroll, he said.
Story updated Tuesday, June 3 at 12:40 a.m.
Ogden developer's California company pleads no contest to insurance fraud
LOS ANGELES -- A California company owned by Ogden developer Gadi Leshem pleaded no contest today to one count of insurance fraud and agreed to repay $6.3 million in workers' compensation premiums in connection with a two-year-old criminal case.
Cover-All Inc., which installs carpeting and flooring as a subcontractor for such businesses as Home Depot, entered the plea before Los Angeles Superior Court Judge David Horwitz, Deputy District Attorney Michael O'Gara, with the Healthcare Fraud Division, said in a prepared statement.
As part of the plea agreement, Leshem, 61, agreed to personally repay the $6.3 million to the State Compensation Insurance Fund, O'Gara said.
Following the no-contest plea by Cover-All, a conspiracy charge and four counts each of insurance fraud were dismissed against Leshem; the company's vice president, Zeev Golan; and his wife, Irit Golan, who served as corporate secretary and payroll supervisor.
Leshem is involved in efforts to establish a Wal-Mart Supercenter at the northwest corner of 20th Street and Wall Avenue in downtown Ogden.
He has also proposed the construction of Ogden Renaissance Village, a riverfront commercial and residential development within the second phase of the Ogden River Project area.
Story updated Monday, June 2 at 7:40 p.m.
Comments
Why is it that whenever a "mistake" is made by people like this "that tried to do the right thing whenever it could" the end result is that millions end up in their own pocket and not the victim's?
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I worked for this firm and from what I saw...NO SURPRISE this kind of thing caught up to them.