Owners of one of the biggest towing businesses in Southern California were arrested on multiple counts of felony insurance fraud.
Bothers Mark Hassan and Ahmed Hassan were charged with underreporting employee payroll and paying parts of employees’ wages in cash to defraud workers’ compensation insurers out of $6 million worth of insurance premiums.
The California Department of Insurance launched an investigation after getting two fraud referrals from an insurance company accusing Mark Hassan, owner of Hadley Tow, of underreporting the payroll of his company.
The CDI investigation expanded after a third referral alleging his brother, Ahmed Hassan, owner of California Heights Tow, filed a false employee injury claim on his policy for an employee at Hadley Tow.
Mark Hassan, who also owns FMG Inc., was doing business as Hadley Tow in Whittier, Courtesy Tow in Sylmar, Crescenta Valley Tow in La Crescenta, California Coach Towing in Walnut and other towing companies in the Los Angeles area. Mark Hassan also had towing contracts with several law enforcement agencies in Southern California.
Detectives learned that Mark Hassan used his uninsured towing company, Courtesy Tow, as a “shell company” to cover up portions of Hadley Tow employee payroll to allegedly defraud workers’ comp carriers of premiums that they were owed. Ahmed Hassan also underreported employee wages to lower his company’s workers’ comp premiums, according to investigators.
The brothers paid all of the employee wages or paid portions without withholding standard deductions, which caused the Employment Development Department to start a payroll tax evasion investigation, according to the CDI.
Hadley Tow and California Heights Tow reported a combined payroll of $3 million to their insurers, but a forensic audit revealed that the actual combined payroll was $16 million. The illegal actions resulted in a premium loss of around $5.8 million.
Mark Hassan was booked in Los Angeles, while Ahmed Hassan was booked in Rancho Cucamonga.
The case is being prosecuted by the Los Angeles County District Attorney’s Office.
Topics
California
Fraud
Workers’ Compensation
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