59 year of Jeff Thranow, of Aptos California, owner of Costa Bella Builders was sentenced on two felony counts of insurance fraud this week.

After paying almost $115,000 in restitution Thranow was then sentenced to an additional one year in jail.

Other Costa Bella employees were also sentenced for their role in the fraud. Vittorio Castelli was sentenced to 6 months in jail for one count of felony insurance fraud. Kathleen Castelli was sentenced for one misdemeanor count of insurance fraud and one count of failure to pay payroll taxes.

The California Department of Insurance, Morgan Hill Office, received information from employees about possible insurance fraud. CDI and investigators from the Santa Cruz County District Attorney Workers’ Compensation Fraud Unit secured search warrants for the business records of the company.

The joint investigation revealed multiple violations relating to the payment of insurance premiums and payroll taxes.

The Employment Development Department also joined in the investigation upon discovering the defendants’ failure to pay payroll taxes to EDD. The investigation uncovered the company stopped paying payroll taxes and workers comp insurance and began paying employees in cash.

Defendants were ordered and paid $85,000 in premium restitution and back taxes of almost $30,000 at sentencing.

Employers are required to register their businesses and to report and pay taxes to EDD for all employees. Unemployment Insurance Code felony violations have a maximum penalty of three years in prison and/or up to $20,000 fine. Failure to secure workers’ compensation insurance has a penalty of up to one year in jail and up to double the amount of the premium owed as a fine payable to the California State Treasury for the Uninsured Employers Fund. The Workers’ Compensation Unit of the District Attorney’s Office investigates and prosecutes cases involving applicant fraud, employer fraud, premium fraud, provider fraud and employers who do not carry workers’ compensation insurance.