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After years of firing employees when they requested medical treatment for work-related injuries, 71 year old Man Tat Szeto, the owner of MT Szeto Construction, admitted to committing felony workers’ compensation insurance fraud.

Worker’s compensation premium fraud occurs when an employer makes material misrepresentations to an insurance carrier about its claims history, payroll or risk classification of its workers, in order to obtain insurance coverage at less than the proper rate.

The construction company handles commercial, multi-family and residential construction projects throughout the greater San Francisco Bay Area.

California Contractors State License Board brought this case to the attention of the Santa Clara County District Attorney’s Office as a result of suspicious activity that occurred at a new residential construction project in San Jose.

In late 2018, multiple former employees reported that they had been fired after requesting medical treatment for injuries they had sustained while at work.  When an employee injured himself, rather than file an appropriate claim with the employee’s insurance company and risk an increase in premium, Szeto simply handed them cash and terminated them.

The employees who frequently worked upwards of 70 hours would be paid for only 40 hours, which is wage theft.

He avoided approximately $86,000 in premium payments to his insurer by underreporting employees and injuries.

To further his scheme, Szeto used the banking system to launder $165,000 to pay employees “off the books.”  Szeto was also charged with unemployment insurance tax fraud and money laundering.

Szeto’s plea agreement requires that he be placed on five years formal probation, serve nine months in county jail, and make restitution of approximately $250,000.

The Santa Clara County District Attorney’s Office, in coordination with the California Department of Insurance and the Department of Industrial Relations, investigated Szeto for nearly two years.