Couple accused in massive insurance fraud scheme - CBS News 8 - San Diego, CA News Station - KFMB Channel 8

Couple accused in massive insurance fraud scheme

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SAN DIEGO (CNS) - The co-owner of a Southern California janitorial company accused of using straw owners to conceal the existence of hundreds of workers to avoid paying millions of dollars in taxes and insurance premiums pleaded not guilty Wednesday to multiple felony charges.

Woo "Stephanie" Kwon., 59, was ordered held on $1 million bail pending a review hearing Jan. 4.

She and her husband, 62-year-old Hyok "Steven" Kwon -- the owners of Good Neighbor Services -- were indicted on charges of workers' compensation fraud, payroll tax evasion and extortion. Each faces 31 years in prison if convicted, according to authorities.

Good Neighbor Services provides cleaning staff to major hotels such as the Hotel Del Coronado, Loews Coronado, La Costa Resort and Spa, the Ritz Carlton, Four Seasons and the Hilton and Hyatt hotel chains.

The investigation -- which began 2 1/2 to three years ago -- allegedly uncovered a methodical and systematic shell game involving six straw owners. Those straw owners were used to conceal the existence of hundreds of hotel workers to avoid paying millions of dollars in insurance premiums and payroll taxes, the government alleges.

For nearly a decade, Good Neighbor Services concealed its real payroll information in order to fraudulently obtain workers' compensation insurance from multiple companies, the indictment alleges.

In doing so, the janitorial company avoided paying more than $3.6 million in insurance premiums and evaded paying more than $3.3 million in payroll taxes, according to the government.

Employees said they did not receive overtime pay or workers' compensation benefits when they were injured on the job, and feared retaliation if they reported their injuries, Dumanis said.

One employee said she had to repeatedly ask for medical attention for her injury. When she was finally sent to a "doctor," she found out later the Kwons sent her to a dentist rather than a physician, court papers allege.

A half-dozen co-defendants -- Melquiades Brizuela Jr., Manuel Rodriguez, Veronica Lucas Cuin, Aimee Sunmyung Kwon, Daniel Kwon and Hyun Bung Chae -- have been charged with workers' compensation premium fraud and tax evasion for their alleged involvement in the scheme. They are expected to be arraigned on Jan. 5.

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