March 14, 2017: Trio Sentenced in Workers’ Compensation Fraud Case
Two clothing manufacturing executives and their accountant were sentenced today for their roles in a $3.8 million workers’ compensation fraud scheme, the Los Angeles County District Attorney’s Office announced.
Sung Hyun Kim, 59, was sentenced to two years in local custody or electronic monitoring and two years of mandatory supervision. Jae Young Kim, 73, and Caroline Sung Choi, 61, were each sentenced to one year in custody or electronic monitoring and placed on probation for five years.
In December, Sung Hyun Kim and Jae Young Kim each pleaded no contest to two counts of workers’ compensation fraud, while Choi entered her plea to two counts of failure to pay state payroll taxes.
Deputy District Attorney Theresa Mitchell of the Healthcare Fraud Division prosecuted the case.
Choi and her sister, Sung Hyun Kim, were corporate officers for Meriko, Inc., and its successor, SF Apparel, both garment manufacturing companies that make high-end brand jeans.
Beginning as early as 2006, Sung Hyun Kim and Jae Young Kim, an accountant, underreported millions of dollars in payroll to insurance carriers. Losses were estimated to be roughly $3.8 million.
By not reporting accurate figures, which also can be accomplished by paying employees in cash, companies avoid paying mandatory employer contributions for unemployment and disability.
Companies pay significantly reduced workers’ compensation premiums when they underreport the number of employees and the amounts actually paid, prosecutors added.
Restitution, investigative costs and fines totaling $4.6 million have been paid.
Case BA435018 was investigated by the California Department of Insurance.