King City Roofing Contractor Ordered to Pay over $159,000 in Restitution for Insurance Fraud

Salinas, California- Monterey County District Attorney Jeannine M. Pacioni announced on Friday, January 31 that 38-year-old Hector Hernandez of King City and owner of Hernandez Roofing, was sentenced by Judge Pamela Butler to 5 years of felony probation for insurance fraud and state tax evasion. As a term of probation, Hernandez was ordered to pay $159,059.03 in restitution to his workers’ compensation insurance carrier, State Compensation Insurance Fund.
Between 2013 and 2016, Hernandez secured a workers’ compensation insurance policy for his business through the State Compensation Insurance Fund (“SCIF”). In order to pay lower insurance premiums, he denied having any employees. The District Attorney’s Office opened an investigation in February 2016, obtaining building permits showing that Hernandez handled about 96 roofing jobs in a 4 year period. Interviews of workers and homeowners revealed that he used at least 3 employees for these jobs. Hernandez attempted to conceal the employees and wages by paying cash. Investigators calculated Hernandez defrauded SCIF of $159,059.00 in premiums.
The District Attorney filed felony charges on January 23, 2018. The charges included intentionally misrepresenting his payroll to SCIF to obtain a reduced premium – a violation of Insurance Code Section 11880(a). Hernandez was also charged with payroll tax violations of the Unemployment Insurance Code. Hernandez pled guilty to 3 felonies on August 23, 2019.
The case was investigated by Monterey County Workers’ Compensation Fraud Unit Investigators Martin Sanchez and George Costa.
Under California law, business owners and the public need to be aware that all employers are required to secure workers’ compensation insurance for their employees so that there is adequate medical coverage and other benefits for any work-related injury that may occur. Additionally, employers are required to register their business with the EDD and report their payroll on a quarterly basis. Failing to file payroll tax returns with intent to evade tax has a maximum penalty of three years and up to a $20,000 fine. Persons having information about suspected workers’ compensation fraud are encouraged to contact the District Attorney’s Office at (831) 755-3224.