Executives at Janitorial Firm Charged in $6.3 Million Workers' Comp Fraud

Two executives with a Sherman Oaks janitorial service company have been arrested and charged with fraud and conspiracy in an alleged $6.3 million workers’ compensation insurance fraud scheme, state insurance officials announced late Wednesday.

Andrew Kim, 43 and Chan Hee Yang, 61, both Northridge residents and executives with Bell Building Maintenance Co., allegedly misrepresented the number of employees at the janitorial company in order to lower the firm’s workers’ compensation insurance premium, according to a Department of Insurance statement.

The company was insured by the State Compensation Insurance Fund, the state’s largest workers’ compensation insurance carrier.

The Department of Insurance statement alleged that between 2000 and 2005, Kim submitted payroll reports to State Fund saying that he and his wife were the only employees of the company. But an investigation by State Fund and the insurance department found that the company had hundreds of janitors servicing private companies and public agencies throughout Southern California.

As a result, the statement said, Bell Building Maintenance did not pay $4.4 million in workers’ compensation premiums and another $1.9 million in unemployment insurance and state disability insurance taxes it owed.

Kim and Yang have been charged with multiple counts, including criminal conspiracy, presentation of false writing to a public entity and misrepresentation to obtain lower rates with State Fund and another unnamed insurance carrier.

A call to Bell Building Maintenance was picked up by an answering service that could not provide any information.

The case is being prosecuted by the Los Angeles District Attorney’s office.

Under-reporting of payroll has been a persistent problem in many industries as employers seek to avoid paying high workers’ compensation insurance premiums.