Four Charged With $12+ Million Tax Fraud
Posted by CotoBlogzz | 5/11/2009 4:00 PM |
SANTA ANA, CA- Four defendants were charged today with committing more than $12 million in tax and Workers’ Compensation Insurance fraud for their demolition company, Democo Corporation (Democo).
A 144 count complaint has been filed against married business owners Joseph Perry Soares, 47, and Kimberly Jane Soares, 43, both of La Habra Heights, general manager James Gregory Campbell, 59, Lakewood, and his son Robert Scott Campbell, 26, Bellevue, WA. The felony charges include conspiracy, perjury, grand theft, forgery, identity theft, misrepresenting facts to State Compensation Insurance Fund, recording false and forged documents, making fraudulent statements, making false statements to discourage workers from claiming benefits, willfully failing to file tax returns, filing false tax returns, and sentencing enhancements for loss over $2.5 million, $1 million, and $150,000. If convicted on all counts, the defendants face a sentence ranging from probation up to approximately 91 years in state prison.
The defendants are each being held on $2.5 million bail and must prove the money is from a legal and legitimate source before posting bail. James Campbell is scheduled for continued arraignment and defendants Robert Campbell and Joseph and Kimberly Soares are scheduled for a pre-trial hearing on May 15, 2009.
For their assistance, the Orange County District Attorney’s Office thanks the California Department of Insurance, Franchise Tax Board, and the Employment Development Department (EDD).
Husband and wife defendants Joseph and Kimberly Soares are accused of owning Democo, a demolition and construction clean-up company. James Campbell is accused of working as the general manager for Democo. Robert Campbell is James Campbell’s son.
Workers’ Compensation Insurance premiums for businesses are determined by the insurance company based on information provided to them by the insured business, including the number of employees, the classification of work performed by those employees, and payroll. In order for demolition businesses to retain work, they must provide a certificate showing that the business has Workers’ Compensation Insurance.
Between Dec. 21, 2001, and March 1, 2009, the defendants are accused of conspiring to commit insurance fraud by failing to pay over $5.7 million in insurance premiums to State Compensation Insurance Fund (SCIF), a quasi-governmental non-profit insurance company established by the California State Legislature. The defendants are accused of failing to secure Workers’ Compensation Insurance for Democo employees, numbering 60 and 120 at a given time during this eight year period. The defendants are accused of falsely claiming only one full-time and one part-time clerical staff, to obtain insurance through SCIF. Democo needed to have a certificate showing they had Workers’ Compensation Insurance in order to obtain work contracts. They are accused of falsely stating to SCIF that the demolitionists employed by Democo were sub-contractors to avoid paying insurance for them.
In order to maintain insurance coverage, SCIF requires an annual audit of insured businesses. The defendants are accused of refusing to allow these annual audits, resulting in cancelation of their insurance policy. Over the course of eight years, the defendants are accused of opening eight policies with SCIF using different business names for Democo in order to avoid the audits. They are accused of stealing the identities of former colleagues and industry professionals and opening the businesses under the victims’ names without their knowledge to avoid detection. Robert Campbell is accused of participating in the conspiracy by using his name to conceal money and hide the fraudulent numbers.
When employees were injured while working at Democo, the defendants are accused of discouraging the employee from pursuing Workers’ Compensation Insurance benefits. They are accused of not providing insurance for their employees and taking injured employees to walk-in clinics for treatment. One victim, who was impaled through the leg while working at Democo, suffered permanent nerve damage without adequate or timely medical attention. The defendants are accused of failing to report any injuries to SCIF and paying cash for the medical treatment of their injured workers.
While performing work on a residence in San Diego, the defendants are accused of stealing more than $14,000 from the home owners. They are accused of accepting a personal check in the amount of $14,718 for work on the home, but then insisting on a wire transfer instead. After receiving the $14,718 wire transfer, the defendants are accused of cashing the personal check, receiving double payment for their work. They are accused of knowingly refusing to return the overbilled $14,718.
The defendants are accused of failing, as required by law, to register their business with the EDD, who oversee the audit and collection of payroll taxes and employment records for workers in California. In 2007, James Campbell is accused of committing perjury by lying under oath during a judicial hearing by falsely claiming that Democo did not have any employees. The judicial hearing was held after Democo was cited by the Department of Labor for failing to have Workers’ Compensation Insurance for their employees.
Joseph and Kimberly Soares are accused of failing to file tax returns and filing false tax return. They are accused of committing more than $6.4 million in tax fraud.