Two former owners of a Walnut Creeka painting and construction company was charged with Alameda County with a third man in a fraud scheme that cost insurance companies around $ 5 million, the authorities said.

Eric Oller and Brian mitchell each has been charged with one count of conspiracy to commit a felony, six counts of insurance fraud and two counts of workers’ compensation fraud, according to a press release. Alameda County District Attorney’s Office and California Department of Insurance.

Both once owned Signature Peinture et Construction Inc., which operates throughout the Bay area. Oller is also the owner of Valhalla Council.

Authorities also said they have charged Yama Sekander, the owner of A-1 World Class Painting, with one count of workers’ compensation fraud.

All three have pleaded not guilty to the charges.

According to authorities, Mitchell used Valhalla Council and A-1 World Class Painting as a shell company to pay Signature Painting and Construction employees from 2017 to 2018.

The intention of this method of remuneration was to illegally reduce SPC’s workers’ compensation insurance premium, authorities said. In the program, authorities said the SPC misrepresented or omitted information about company structure and wage costs to its insurers in order to reduce these premiums.

“If a business creates an environment in which it falsely pays a lower insurance premium, that business has an unfair competitive advantage over a law-abiding business,” the Alameda County District Attorney said. Nancy O’Malley said in a statement.

Prosecutors allege Michell illegally misclassified employees and underestimated wage costs to reduce insurance premiums. An employer must pay higher premiums as the risk of the job increases, authorities said.

Mitchell and Oliver are also accused of making deals to move employees from one company to another in order to save money on workers’ compensation costs. Authorities accused Mitchell of using Sekander’s A-1 company to secure a workers’ compensation policy for the SPC company.

SPC owners paid some of the employees under the table and asked other injured employees to report working for one company, when they actually worked for another, authorities said, adding that this allowed the SPC to avoid paying or filing their taxes.

Authorities said insurance company SCIF lost about $ 3.1 million as a result of the program, while AmTrust lost approximately $ 1.9 million.

The states Compensation insurance fund submitted a fraud complaint against the company in 2019 and authorities have started to investigate. The crimes date back to 2015, authorities said.

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