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Charges have been dropped against three people accused of defrauding the state’s compensation insurance fund to save more than $127,000 in workers’ compensation insurance premiums.

El Dorado Superior Court Judge Mark Ralphs dismissed the charges on Tuesday during the fourth week of a jury trial.

According to the report by MSN, the ruling came after last-minute evidence surfaced that showed the defendants were acting on the professional advice of a Roseville insurance agency. A representative of the insurance agency advised the defendants in an email that a carpentry company qualified as a new business and thus lower insurance rates from the State Compensation Insurance Fund.

“In light of this new evidence, the People do not believe we can prove the case beyond a reasonable doubt against the defendants,” stated a Sept. 20 memo by El Dorado County Deputy District Attorney Joddie Jenson asking the judge to drop the case.

Troy Williams, 49 of Angel Camp, John Allison, 63, of Rocklin, and Nanci Morman, 68, of Somerset, were charged last May with multiple counts of insurance fraud after a joint investigation by the California Department of Insurance and the El Dorado County District Attorney’s Office.

This has been a nightmare for me,” said Williams, who suffers from brain cancer. He said the investigation started back in 2018 and has caused constant anxiety while dealing with his medical issues.

Before this month’s trial, Williams said he was offered a plea deal of paying a $127,000 fine and no jail time if he agreed to plead guilty to misdemeanor charges. Otherwise, he faced a multi-year prison term if found guilty. “I am adamant that I am not going to let my own government try to blackmail me into saying I did something I didn’t do,” Williams said in an interview. While he won’t be paying a fine, his legal bills have cost more than $125,000, he said.

Authorities had contended that Williams, the owner of Archer Building Co. in El Dorado Hills, had conspired with John Allison back in 2016 to move his employees to a new company, Allison Development in Roseville, in order to save on worker’s compensation rates.

During a 4-year period, from 2016 to 2020, the three defendants were alleged to have saved more than $127,000 in insurance premiums.

Allison had been a senior employee of Williams at Archer Building Co. Archer had seen its worker compensation rates spiral because of several accidents on construction sites. Morman was the bookkeeper for both companies.

The three defendants had insisted the movement of employees from Archer to Allison wasn’t to save on workers’ compensation rates but to keep several dozen Archer workers including Allison employed in case of Williams death.

Williams in the interview said his business partner Jay Young had died in 2016 and that he was receiving chemotherapy that prevented him from managing his business adequately. He said he also wanted to reduce his workload and not have any direct employees. So. Williams said he continued his business without direct employees, relying on subcontracted workers from Allison Development.

The Department of Insurance and The El Dorado County District Attorney had contended until this week it was all a ploy between the three individuals to save on their workers’ compensation premiums.

In a statement, El Dorado County District Attorney Vern Pierson said defense attorneys for the three individuals did not disclose the email from the insurance broker. Pierson maintained that defense attorneys had the email in their possession the entire time this case was pending, despite repeated requests and an order from the court to provide discovery of their files.  “If they had disclosed this information earlier, we would not have filed charges,” he said. “If they had disclosed this information prior to trial, we would have dismissed.”

But Travis Owens, the lead attorney for the three charged individuals, said he had not seen the email until last week. He said the prosecutor’s office and state fraud investigators had done “an inadequate investigation.” Owens said the email from insurance broker Chad Watts that Allison Development could file for workers’ compensation insurance as a new business, which resulted in lower rates than Archer was paying, was only discovered by bookkeeper Morman in her files in the last few days.

Both officials of Pierson’s office and Owens said that Watts had previously been interviewed as part of their due diligence. But that the prior interviews had not turned up the information or the email that Watts had given the three defendants his professional advice that ended up resulting in lower insurance premiums for Allison Development.