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Tag: 2024 News

Significant Panel Decision Clarifies Rules on “Timely” Petition for Recon

On March 27, 2024, the Appeals Board issued its opinion in Sandra Ja’Chim Scheuing v Lawrence Livermore National Library -ADJ8655364; -ADJ14830172, and designated it as a significant panel decision.

Significant panel decisions are not binding precedent in workers’ compensation proceedings; however, they are intended to augment the body of binding appellate court and en banc decisions and, therefore, a panel decision is not deemed “significant” unless, among other things: (1) it involves an issue of general interest to the workers’ compensation community, especially a new or recurring issue about which there is little or no published case law; and (2) all Appeals Board members have reviewed the decision and agree that it is significant.

In Ja’Chim Scheuing, the Appeals Board discussed its approach to cases where a petition for reconsideration is timely filed, but the case is not timely received by the Appeals Board, and clarified that the Appeals Board will continue to follow the long-time precedent in Shipley v. Workers’ Comp. Appeals Bd. (1992) 7 Cal.App.4th 1104, 1108 [57 Cal.Comp.Cases 493].

Sandra Ja’Chim Scheuing requested reconsideration of the Findings & Award issued by a WCJ who found her injury caused permanent disability of 28%. Applicant contends on reconsideration that she is 100% permanently and totally disabled, and that the WCJ failed to fully consider all of the medical and vocational evidence in making his determination. In this case, the WCJ issued the Findings & Award on December 1, 2023, and applicant filed a timely Petition for Reconsideration on December 18, 2023 at the Oakland district office. As required by Rule 10205.4 (Cal. Code Regs., tit. 8, § 10205.4).

Her paper Petition was scanned into the Electronic Adjudication Management System (EAMS). (See Cal. Code Regs., tit. 8, §10206 [electronic document filing rules], § 10205.11 [manner of filing of documents].)  When a petition is filed, a task is sent to the WCJ through EAMS so that the WCJ receives notice that a Report is required. (See Cal. Code Regs., tit. 8, §10206; 10962.) No such notice is provided to the Appeals Board. Thereafter, the district office electronically transmits the case to the Appeals Board through EAMS and notifies the Appeals Board that it has been transmitted.

There are 25 days allowed within which to file a petition for reconsideration from a “final” decision that has been served by mail upon an address in California. (Lab. Code, §§ 5900(a), 5903; Cal. Code Regs., tit. 8, § 10507(a)(1).) This time limit is extended to the next business day if the last day for filing falls on a weekend or holiday. (Cal. Code Regs., tit. 8, § 10508.) To be timely, however, a petition for reconsideration must be filed (i.e., received) within the time allowed; proof that the petition was mailed (posted) within that period is insufficient. (Cal. Code Regs., tit. 8, §§ 10845(a), 10392(a).)

Here, according to Events in EAMS, which functions as the “docket,” although the Petition for Reconsideration was timely filed on December 18, 2023 at the Oakland district office, the district office transmitted the case to the Appeals Board on February 21, 2024. Thus, the first notice to the Appeals Board of the Petition was on February 21, 2024. Thereafter, the WCJ issued the Report on February 27, 2024. Due to this lack of notice by the district office, the Appeals Board failed to act on the Petition within 60 days, through no fault of the parties.

Therefore, considering that applicant filed a timely Petition for Reconsideration and that the Appeals Board’s failure to act on that Petition was a result of administrative error, “we conclude that our time to act on applicant’s Petition was tolled until 60 days after February 21, 2024.”

Once a case is pending at the Appeals Board, parties may not submit new evidence or raise new issues, unless the Appeals Board specifically provides notice and orders further proceedings to consider further evidence and/or issues. (See Lab. Code, §§ 5906, 5907, 5908(a).)

Here, applicant did not seek permission to file supplemental pleadings as required by WCAB Rule 10964. While WCAB Rule 10964 does not require the Appeals Board to accept supplemental pleadings, the Appeals Board may exercise its discretion to accept a supplemental pleading and consider it. Here the WCAB accepted applicant’s letters of February 22, 2024 and March 1, 2024 for filing as supplemental pleadings and considered them.

We believe that as a matter of due process, once a party has confirmed timely filing of a petition under WCAB Rule 10615 (Cal. Code Regs., tit. 8, § 10615), they should be able to reasonably expect that the petition will be considered by the Appeals Board. As explained above, until it is transmitted to the Appeals Board, the case remains at the district office level, and all status inquiries should be directed to the district office. When the 60- day period in section 5905 has expired and there has been no response by the Appeals Board, we recommend that the parties contact the district office to confirm that the case has been transmitted to the Appeals Board and that notice was provided to the Appeals Board. Once they have received this confirmation from the district office, they may follow up by email with the Appeals Board’s Control Unit at”

This time limit is jurisdictional and therefore, the Appeals Board has no authority to act upon or consider an untimely petition for reconsideration. (Maranian v. Workers’ Comp. Appeals Bd. (2000) 81 Cal.App.4th 1068, 1076 [65 Cal.Comp.Cases 650, 656];  Rymer v. Hagler(1989) 211 Cal.App.3d 1171, 1182; Scott v Workers’ Comp. Appeals Bd. (1981) 122 Cal.App.3d 979, 984 [46 Cal.Comp.Cases 1008, 1011]; U.S. Pipe & Foundry Co. v. Industrial Acc. Com. (Hinojoza) (1962) 201 Cal.App.2d 545, 549 [27 Cal.Comp.Cases 73, 75-76].)

In contrast, here, applicant’s Petition for Reconsideration was timely filed on December 18, 2023, seventeen days after the WCJ’s decision of December 1, 2023. Thus, as explained above, the Appeals Board has the authority to act upon the Petition and to consider it.

Five San Diego Residents Face Disability Insurance Fraud Charges

Tyler Andrew Liebowitz, 45, of San Diego, was arraigned on 15 felony counts of insurance fraud after an investigation by the California Department of Insurance and the San Diego County District Attorney’s Office found he allegedly conspired with others to receive insurance benefits they were not entitled to by submitting dozens of fraudulent insurance documents for a long-term disability policy.

Liebowitz conspired with four other individuals who were also arraigned for their role in the scheme, including his brother, Dean Craig Liebowitz, 52, of Del Mar, who was arraigned on six felony counts of insurance fraud.

The investigation found they conspired to defraud the insurance company by filing fraudulent claims against the long-term disability policy of the Liebowitz brothers’ mother.

Detectives learned that 63 fraudulent claims documents were submitted for insurance benefits reporting the defendants as her caregivers. Analysis of the claim documentation, bank records, mobile phone records, and other data revealed that many of the payments they attempted to receive were for times caregivers were not present.

The investigation also found that suspects made false statements about the amount of money paid to the reported caregivers and the number of hours worked. In certain instances, narcotics were provided in exchange for insurance benefit money derived from false claims of work performed.

The other defendants include:

– – Ashlin Nerisa Prol, 37, of San Diego, who was arraigned on six counts of felony insurance fraud.
– – Ali Jamal Ibrahim, 21, of San Diego, who was arraigned on five counts of insurance fraud.
– – Audra Jane Birndorf, 55, of San Diego, who was arraigned on three felony counts of insurance fraud.

Tyler Liebowitz was arrested on March 11, 2024 and Dean Liebowitz was arrested on March 18, 2024. The other defendants self-surrendered at their arraignments. The San Diego County District Attorney’s Office is prosecuting this case.

Camarillo Insurance Agent Found Guilty of $1.2M Grand Theft

Former licensed insurance agent Brett E. Lovett, 53, of Camarillo was found guilty of 29 felony counts including grand theft, elder abuse, money laundering, and burglary after a 15-month California Department of Insurance investigation found he defrauded at least nine victims, including senior citizens, of close to $1.2 million.

Lovett was arrested in October 2017 along with Robert C. Burlisonnof La Canada after the Department’s investigation revealed that between 2011 and 2016, Lovett defrauded at least nine victims. Several of his victims were senior citizens whom he met and befriended at a place of worship in Carpinteria. Other victims sought legal advice from Lovett through his legal aid information business.

Burlison, a licensed California attorney and owner of Burlison Law Group in Pasadena, California, was alleged in the felony complaint to have aided and conspired with Lovett. According to an article in the Los Angeles Times, Burlison denied any wrongdoing and said he has “no connection at all” to Lovett – that he was also a victim of his fraud.

“Somehow, the Department of Insurance thinks he’s a bad guy, and that I conspired with him, and that’s the furthest from the truth,” Burlison said in an interview. “That is not me, it did not occur.”

Victims entrusted Lovett with their money for proposed investments that never existed, or for financial management purposes. Lovett then misappropriated the money for his own personal use and to repay some of his victims — sometimes using his Power of Attorney and Promissory Notes to embezzle funds from victims.

“This former licensed insurance agent preyed on innocent senior citizens to line his pockets with no regard for his victims’ wellbeing,” said Insurance Commissioner Ricardo Lara. “Thanks to the hard work by my Department investigators and the Santa Barbara County District Attorney’s Office his victims will have justice.”

Lovett has a history of embezzling money from members of the places of worship he attends.

In 2007, doing business as Northwest Asset Fund, he was ordered to pay more than $675,900 in restitution, fines and sanctions by the U.S. Commodity Futures Trading Commission (CFTC). Lovett never paid the fines or restitution.

The CFTC entered a permanent injunction against Lovett, who never registered with the CFTC. Between October 2002 and August 2005, Lovett fraudulently solicited money from individuals, purportedly to trade commodity futures, through false promises of high returns from a low-risk investment.

Lovett’s license to transact insurance expired in May 2000. He was not acting as an insurance agent during this time, but he was giving financial advice which he was not licensed to give.

Lovett is scheduled to return to court for sentencing on May 9, 2024. The Santa Barbara County District Attorney’s office is prosecuting the case.

State Bar records reflect that Burlison was disbarred in 2019 after he stipulated to committing three acts of professional misconduct related to a single client matter.

Fresno Restaurant Resolves Wage-Hour Case for $2M

The Labor Commissioner’s Office has reached a $2 million settlement against Pearl B-Star, Inc. DBA Lin’s Fusion Restaurant in Fresno for underpaying 32 workers. Pearl B-Star, Inc.’s violated state labor laws governing recordkeeping, payroll timekeeping and cash pay without wage statements.

The restaurant has a 20 year history serving the Fresno community.

The Bureau of Field Enforcement (BOFE) was referred this case by the Fresno County District Attorney’s Office. BOFE’s investigation began in 2019 and found that workers, many of them immigrants, were paid a salary in cash and were not compensated for overtime, split shifts, meal periods and contract wages.

The Employment Development Department (EDD) and the Joint Enforcement Strike Force (JESF) also participated in the investigation.

Any one that worked at Lin’s Fusion between September 26, 2016, and September 26, 2019, should immediately contact LCO at (619) 767-2039 as they may be entitled to owed wages and damages under the settlement agreement.

All workers in California are protected under the California labor code, regardless of immigration status. If you work in California, you have rights. Workers should not be afraid to come forward with allegations of wage theft.

Today’s action builds on multiple other enforcement actions announced this year including reaching a $1 million settlement for warehouse workers who were victims of wage theft, another $1 million settlement for janitors who cleaned Cheesecake Factory restaurants, and a new $18 million grant program to prosecute wage theft.

Labor Commissioner Lilia García-Brower said “When enforcement agencies work together, we are best able to protect workers. In this case systemic violations were detected, the perpetrating employer was held accountable, and workers are receiving owed wages. We look forward to continuing to collaborate on many cases to protect workers and law-abiding employers.”

Worker Entitled to Attorney Fees Irrespective of Amount Recovered

Elinton Gramajo worked as a delivery driver for Joe’s Pizza from February 2014 to June 2015.

In February 2018,he sued Joe’s Pizza on Sunset, Inc.; Joe’s Pizza on Sunset, LLC; and Giuseppe Vitale for failure to pay minimum and overtime wages (Lab. Code, §§ 510, 558, 1194), failure to provide rest and meal periods (Lab. Code, §§ 512, 226.7), failure to pay wages due at time of termination (Lab. Code, §§ 201, 202, 203), failure to reimburse for business expenses (Lab. Code, § 2802), and unfair business practices (Bus. & Prof. Code, § 17200). Gramajo also sought declaratory and injunctive relief.

After nearly four years of litigation and extensive discovery, the matter was set for trial in October 2021. Gramajo sought $26,159.33 in unpaid minimum and overtime wages, missed meal and rest breaks, waiting time penalties, and unreimbursed expenses. After a seven-day trial, the jury found in favor of Gramajo on his minimum wage and overtime causes of action. The jury awarded Gramajo $2.17 in unpaid minimum wages and $3,340 in unpaid overtime wages. In total, Gramajo recovered $7,659.63, consisting of the unpaid minimum and overtime wages; $2,115.59 in statutory interest; $2,100 in waiting time penalties calculated at the daily wage rate of $70 per day for thirty days per Labor Code section 203; $2.17 in liquidated damages; and $100 in statutory penalties.

Gramajo moved for attorney fees totaling $296,920 for 228.4 hours billed at $650 per hour and applying a multiplier of two. Gramajo also requested $26,932.84 in costs. Joe’s Pizza opposed the fee request and moved to tax Gramajo’s costs in their entirety.

The trial court denied Gramajo’s fee request and granted Joe’s Pizza’s motion to tax costs, ultimately awarding Gramajo nothing. The trial court found Gramajo acted in bad faith by artificially inflating his damages figure and including equity claims he never intended to pursue to justify filing the case as an unlimited civil proceeding. The trial court noted Gramajo sought $26,159.33 at trial, just over the jurisdictional amount, which included $10,822.16 in unreimbursed expenses.

In trial, however, Gramajo never introduced any evidence to support his expense claim. Similarly, Gramajo never pursued injunctive or declaratory relief at trial despite requesting that relief in his complaint. The trial court also found the case was severely over litigated, noting Gramajo had propounded 15 sets of written discovery requests and noticed 14 depositions despite only admitting 12 exhibits at trial.

On appeal, Gramajo argues the trial court should have awarded him reasonable litigation costs under Labor Code section 1194, subdivision (a), and abused its discretion by applying Code of Civil Procedure section 1033, subdivision (a), to deny those costs in their entirety.

The Court of Appeal agreed with Gramajo in the published case of Gramajo v. Joe’s Pizza on Sunset, Inc. -B322697 (March 2024).

Code of Civil Procedure section 1033 gives the trial court discretion to deny litigation costs based on the amount recovered while Labor Code section 1194 provides for a mandatory cost award regardless of that amount. Neither statute address the question of which one should control in this area of overlap.

The Court of Appeal held the “Labor Code section 1194, subdivision (a), controls given the legislative intent behind Labor Code section 1194, subdivision (a), and because that statute is more recently enacted and more specific relative to Code of Civil Procedure section 1033.”

It concluded that ” employees who prevail in actions to recover unpaid minimum and overtime wages are entitled to their reasonable litigation costs under Labor Code section 1194, subdivision (a), irrespective of the amount recovered.

It however expressed no opinion on the reasonableness of Gramajo’s requests for litigation costs. Accordingly, it reversed and remanded the matter for the trial court to determine a reasonable fee and cost award.

U.S. DOJ Sues California Dept. of Corrections for Employment Discrimination

The U.S. Justice Department has challenged the California Department of Corrections and Rehabilitation (CDCR) on its denial of religious accommodations for correctional officers of various faiths, including Sikhs and Muslims, who wear facial hair as an expression of their faith. CDCR generally prohibits correctional officers from wearing beards, and the action seeks a temporary court order allowing these officers to wear beards while CDCR fully assesses options for providing them with religious accommodations while complying with California safety regulations.

The department’s action, filed in the U.S. District Court for the Eastern District of California, alleges that although many officers had performed their jobs successfully for years while wearing facial hair, CDCR implemented a revised facial hair policy last year and, since then, has repeatedly denied religious accommodation requests, forcing officers to shave their beards or lose their jobs. The affected officers have been forced to violate core tenets of their faiths and have suffered shame and humiliation among their religious communities, including being shunned from houses of worship and denied participation in religious ceremonies, such as family weddings.

Since CDCR implemented its revised facial hair policy, numerous officers have filed charges of religious discrimination with the U.S. Equal Employment Opportunity Commission (EEOC) under Title VII of the Civil Rights Act of 1964 (Title VII). Because the EEOC’s investigation remains ongoing, the department is seeking relief in its requested court order only until the EEOC finishes its full investigation or until CDCR can otherwise show the court it has met its religious accommodation obligations under Title VII. The department’s complaint alleges that CDCR has failed to meaningfully consider the range of options proposed by the charging parties or those used by other correctional institutions to accommodate officers’ religious beliefs while meeting safety requirements. The department asks the Court to order CDCR to stop enforcing its facial hair policy against officers who request to wear a beard because of their religious beliefs and engage in good faith discussions with officers about possible reasonable accommodations that would allow officers to safely do their jobs and adhere to their religious beliefs.

“Our district is one of the most diverse in the country, with communities of many different faiths practicing customs that are central to their beliefs. The action brought today is an important use of the federal civil rights laws to protect this religious expression,” said U.S. Attorney Phillip A. Talbert for the Eastern District of California. “My office will continue to work hand in hand with the Civil Rights Division to ensure that individuals of all faiths can receive due consideration for appropriate religious accommodations at workplaces in this District.”

Sikhs, Muslims and employees of other minority faiths should not be forced to choose between the practice of their faith and their jobs,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “Religious freedom and religious accommodation are bedrock principles of our democracy. We are taking action to ensure that the rights of employees of minority faiths are respected and accommodated in the workplace. As faith communities celebrate Ramadan and other important holidays across religions in the coming weeks, the Justice Department will continue to combat religious discrimination in the workplace.”

Trial Attorneys Alicia Johnson and Sharion Scott of the Civil Rights Division’s Employment Litigation Section and Assistant U.S. Attorney Robert Fuentes for the Eastern District of California are handling the case.

California Supreme Ct. Clarifies “Hours Worked” in Wage Order 16

The California Flats Solar Project is a solar power facility located on privately owned land in Monterey and San Luis Obispo Counties. First Solar Electric, Inc. owns the facility. A subcontractor hired George Huerta and other workers to assist CSI Electrical Contractors, the company providing “procurement, installation, construction, and testing services” at the Site. A designated road provided access between a guard shack located at the Site’s perimeter and the employee parking lots. A security gate was located on that road several miles from the guard shack; from the Security Gate, it would take Huerta approximately 10 to 15 minutes to reach the parking lots. Huerta underwent security checks at the Security Gate and was told by CSI management that this gate was the “first place” he had to be at the beginning of the workday.

In the morning, vehicles formed a long line outside the Security Gate, where guards scanned each worker’s badge and sometimes peered inside vehicles and truck beds. At the end of the day, workers again formed a long line inside the Security Gate, where the exit procedure took place. The exit procedure could take up to a minute or more per vehicle and caused delays of five to over 30 minutes. CSI told Huerta that security guards had the right to search vehicles during the entry and exit processes, and the guards visually inspected the bed of his truck for stolen tools or endangered species. Huerta was not paid for the time he spent waiting to pass through the Security Gate at the beginning or end of the workday.

Because two endangered species were present near the Site, the Department of Fish and Wildlife required First Solar to obtain an Incidental Take Permit (ITP) before work could begin on the project. The ITP imposed a speed limit of 20 miles per hour on the access road between the guard shack and the parking lots, and restricted the roads that could be taken at the Site. It also required a biologist to monitor the Site to minimize disturbances to species’ habitats. As part of this monitoring, the biologist each morning ensured that the road between the guard shack and the parking lots was clear of endangered species before anyone could enter the Site. On some occasions, this clearing process added to the time Huerta spent waiting in line to enter the worksite in the morning.

As First Solar’s subcontractor, CSI was required to abide by the ITP and was required to ensure that its employees did as well. After passing through the Security Gate each morning, Huerta was subject to the rules imposed by the ITP in addition to other rules governing his conduct. CSI required adherence to speed limits between five and 20 miles per hour; restricted travel to driving on the access road to reach the Site, thereby prohibiting employees from driving on other roads near the Site or walking or biking from the Security Gate to the parking lots; and prohibited employees from honking their horns, playing music that could be heard outside of their vehicles, or otherwise disturbing local wildlife. Violation of these rules or other Site rules could result in suspension or termination. Huerta was not paid for the time he spent driving between the Security Gate and the employee parking lots.

Huerta’s employment was governed by two collective bargaining agreements (CBAs), which specified that the standard workday included an unpaid 30-minute meal period. CSI did not allow workers to leave the Site during the workday and instructed workers to spend their meal periods at a designated area near their assigned worksite (Installation Site). In accordance with the CBAs, Huerta was not paid for his meal periods.

Huerta filed a wage and hour class action in the Superior Court of Monterey County on behalf of himself and all others similarly situated against CSI, seeking payment for unpaid hours worked. The suit was removed to the United States District Court for the Northern District of California. The district court granted Huerta’s motion for class certification. CSI then filed a motion for partial summary judgment on the class claims Huerta raised in his first amended complaint; that motion was granted by the district court. CSI filed a second motion for partial summary judgment on the class claim that survived the first motion for partial summary judgment. This second motion was also granted.

Huerta timely appealed the orders granting CSI’s motions for summary judgment to the Ninth Circuit, which certified three questions to the California Supreme Court which answered those questions in the case of Huerta v CSI Electrical Contractors S275431 (March 2024). The request from the Ninth Circuit was to answer three questions about Wage Order No. 16 and the scope of the term “hours worked.”  Industrial Welfare Commission wage order No. 16-2001 (Wage Order No. 16) governs wages, hours, and working conditions in the construction, drilling, logging, and mining industries. (Cal. Code Regs., tit. 8, § 11160.) It entitles certain employees in these industries to at least minimum wage compensation for “hours worked.”

First: “Is time spent on an employer’s premises in a personal vehicle and waiting to scan an identification badge, have security guards peer into the vehicle, and then exit a Security Gate compensable as ‘hours worked’ within the meaning of . . . Wage Order No. 16?” (Huerta v. CSI Electrical Contractors, Inc. (9th Cir. 2022) 39 F.4th 1176, 1177 (Huerta).)

Second: “Is time spent on the employer’s premises in a personal vehicle, driving between the Security Gate and the employee parking lots, while subject to certain rules from the employer, compensable as ‘hours worked’ or as ‘employer-mandated travel’ within the meaning of . . . Wage Order No. 16?” (Ibid.)

And third: “Is time spent on the employer’s premises, when workers are prohibited from leaving but not required to engage in employer-mandated activities, compensable as ‘hours worked’ within the meaning of . . . Wage Order No. 16, or under California Labor Code Section 1194, when that time was designated as an unpaid ‘meal period’ under a qualifying collective bargaining agreement?” (Ibid.)

And the Supreme Court provided the answers to each question. “First, an employee’s time spent on an employer’s premises awaiting and undergoing an employer-mandated exit procedure that includes the employer’s visual inspection of the employee’s personal vehicle is compensable as “hours worked’ within the meaning of Wage Order No. 16, section 2(J).

“Second, the time that an employee spends traveling between the Security Gate and the employee parking lots is compensable as ’employer-mandated travel’ under Wage Order No. 16, section 5(A) if the Security Gate was the first location where the employee’s presence was required for an employment-related reason other than the practical necessity of accessing the worksite. Separately, this travel time is not compensable as ‘hours worked’ because an employer’s imposition of ordinary workplace rules on employees during their drive to the worksite in a personal vehicle does not create the requisite level of employer control.”

“Third, when an employee is covered by a collective bargaining agreement that complies with Labor Code section 512, subdivision (e) and Wage Order No. 16, section 10(E), and provides the employee with an ‘unpaid meal period,’ that time is nonetheless compensable under the wage order as ‘hours worked’ if the employer prohibits the employee from leaving the employer’s premises or a designated area during the meal period and if this prohibition prevents the employee from engaging in otherwise feasible personal activities. An employee may bring an action under Labor Code section 1194 to enforce the wage order and recover unpaid wages for that time.”

Well Known Los Angeles Attorney Charged in $2.4M Tax Case

A federal grand jury has indicted Los Angeles attorney Milton C. Grimes with the evasion of payment of his individual income taxes and willful failure to pay taxes.

Grimes served as the lead attorney for Rodney King 30 years ago, and was responsible for prevailing in a $3.8 million civil claim on behalf of King. Rodney King was the black motorist whose beating at the hands of LAPD sparked the deadly 1992 riots and led to local and national police reform.

It is not the first time tax charges have been leveled against Grimes. Not long after the lawyer made national headlines representing accused murderer Sheryl Lynn Massip – who was charged with running over her infant son with the family Volvo in 1987, Grimes pled guilty in 1988 to three counts of willfully failing to file a tax return. (Rev. & Tax. Code, § 19401.)

According to the California Supreme Court records (51 Cal.3d 199 (1990) 793 P.2d 61 270 Cal. Rptr. 855) Grimes was suspended from the practice of law for a period of two years, but the order of suspension was stayed, and he was placed on probation for two years upon conditions including sixty days’ actual suspension, and that he comply with the other conditions of probation. Grimes acknowledged the omission in 1988 when he pleaded guilty to a misdemeanor tax charge in Orange County Municipal Court. He was ordered to pay delinquent taxes of $1,269, along with a $4,000 fine, and to perform 100 hours of community service.

The current indictment filed in March 2024, charges Grimes with one count of attempted tax evasion and four counts of willful failure to pay taxes. He is expected to be arraigned in United States District Court on April 10.

According to the indictment, Grimes owed the IRS more than $1.7 million in taxes for tax years 2010 and 2014.

The IRS tried to collect the unpaid taxes from Grimes by, among other things, levying his personal bank accounts. In response to IRS collection efforts, from 2014 through 2020, Grimes allegedly engaged in a scheme to thwart the tax levies by keeping his personal bank account balances low.

Grimes deposited the money he earned from representing clients into his law firm’s business bank accounts, and then he routinely purchased cashier’s checks and withdrew cash from those business bank accounts, the indictment states.

By not depositing income earned into his personal accounts, Grimes allegedly avoided IRS collection efforts. With this scheme, Grimes allegedly withdrew approximately $16 million in funds from the business accounts in cashier’s checks during those years, rather than paying the amount owed to the IRS.

Grimes also allegedly filed individual income tax returns for tax years 2018 through 2021 reporting that he owed approximately $700,000 in taxes. Grimes allegedly did not, and has not, paid the taxes that he self-reported he owes.

In total, Grimes is alleged to have caused a tax loss of approximately $2,418,050 to the IRS.

If convicted, Grimes faces up to five years in prison for the tax evasion count and up to one year in prison for each count of willful failure to pay taxes. A federal district court judge will determine any sentence after considering the United States Sentencing Guidelines and other statutory factors.

Hi-Level S.F. City Manager Arrested for Stealing $627K in Work Comp Funds

The San Francisco District Attorney announced the arrest of 38 year old Stanley Ellicott who lives in Oakland, and who is a manager in the HR Department for the City, on 62 felony charges involving the theft of more than $627,000 directly from the Department of Human Resources’ Division of Workers’ Compensation, the very department where he worked.

A criminal complaint filed by the San Francisco District Attorney’s Office alleges that, over a four-and-a-half-year period from May of 2019 to January of 2024, Ellicott stole $627,118.86 from the City. The complaint alleges one count of grand theft (PC 487(a)) and one count of misappropriation of public money (PC 424). The complaint also alleges 10 counts of insurance fraud (PC 550(a)(5)) as well as 50 counts of money laundering (PC 186.10). Further, the complaint alleges an aggravated white collar crime enhancement (PC 186.11) and that one of the money laundering counts was committed while Ellicott was out on bail in another case (PC 120221(b)).

An affidavit filed with the Court in support of the arrest warrant explains that at the time of the crimes, Ellicott was the Assistant Director of Finance and Technology for the City’s Human Resources Department, Workers’ Compensation Division. One of his responsibilities was to oversee “the financial integrity of the Workers’ Compensation Division.”

The affidavit describes how Ellicott enlisted a friend to register a fake business in Illinois called “IAG Services” and open a bank account for the business, which she gave full control of to Ellicott. Ellicott then added this fake business as a vendor in the workers’ compensation system and over time billed more than 600 actual City workers’ compensation claims with charges for auditing services. Department archives show no evidence any auditing services were ever performed. Because the City is self-insured for workers’ compensation purposes, payments to doctors, employees, and vendors related to workers’ compensation claims come directly from the City’s coffers.

The affidavit further explains that all of the City payments to “IAG Services” were deposited into the account set up by Ellicott’s friend, then the money was systematically transferred into Ellicott’s personal checking accounts in a pattern to appear like they were payroll payments. In total, he transferred more than $488,000 from IAG’s account into accounts belonging to him.

The affidavit describes a website for the Illinois business “IAG Services” created in Oakland – where Ellicott lives – and IAG emails sent to Ellicott’s work address that appear to be created by him. The affidavit also explains that on several occasions, Ellicott emailed his subordinates and directed them to process payments to IAG that he had approved, enlisting their unknowing and unwitting assistance in his fraud.

This is a second case against Ellicott who was charged in January in a separate case for his role in a scheme to misappropriate grant funds awarded through the City’s Community Challenge Grant Program. He faces charges in court number 24001435 for misappropriating City money, aiding and abetting his co-defendant – former employee of the Office of the City Administrator Lanita Henriquez – in having a conflict of interest in contracts she entered into on behalf of the City by kicking grant money back to her, and possessing stolen property by selling electronics purchased with City funds on eBay. Local businessman and former City employee Rudolph Dwayne Jones is also a co-defendant in that case.

Ellicott was arrested without incident in Oakland this morning and will be arraigned in Department 10 of the San Francisco Superior Court on March 22, 2024. If convicted of all counts, Ellicott faces a substantial term of incarceration in state prison.

“The charges announced today reflect my Office’s continuing commitment to uncover official misconduct in San Francisco’s City government,” said District Attorney Brooke Jenkins. “My Office would like to thank the Department of Human Resources for its swift and thorough cooperation in uncovering the depths of their trusted manager’s great betrayal.”

Ellicott began working for the city in 2012, with a brief hiatus between 2015 and 2016. He was a manager at the human resources department from 2017 until January 25 of this year, when he was placed on paid leave. Transparent California lists Ellicott’s 2022 pay as $187,884, with benefits of $55,613, for a total compensation package of $243,496.t

Newsom Derails Indoor Heat Standard Rules Over Cost Concerns

It has taken five years for California to adopt regulations to protect workers from indoor heat. This week there was an unexpected delay.

CalMatters reports that the rule was expected to be finally voted into place by the Occupational Safety and Health Standards Board at a meeting this week in San Diego. But Wednesday night, state officials ordered that it be pulled from the agenda after Gov. Gavin Newsom’s administration suddenly withdrew a required stamp of approval, saying it learned the rule would cost state prisons much more money than anticipated.

The eleventh-hour move infuriated workers, their advocates – and the safety board itself, which faced a brief protest by the rule’s proponents during the meeting. Then in an equally remarkable rebuke, the board unanimously voted to approve the indoor heat rule anyway.

The six-member board, an independent part of the state’s labor agency, is appointed by the governor. Members said during the meeting that they had been “blindsided,” that the move to pull the agenda item was “a slap in the face” and that workers in numerous other industries such as warehouses, manufacturing and restaurants had waited long enough.

Still, the future of the rule is uncertain.

Approved regulations cannot become law without the sign-off from the state’s Department of Finance, which it withdrew Wednesday night. Department spokesperson H.D. Palmer told CalMatters it had received a late estimate “in the last few weeks” from the California Department of Corrections and Rehabilitation that it would cost the state billions more dollars to comply with the rule in state prisons than the state’s workplace safety agencies predicted. He did not explain why the information came so late, but said after the vote that his department has been meeting with the board’s staff in recent weeks.

And this weeks meeting was only nine days before a deadline in California administrative law to approve the proposed rule – with a sign-off included – for it to take effect this summer.

Board members said they hoped their move would spur the administration to resolve its concerns with the proposed rule with more urgency.  They also asked Cal/OSHA, which enforces workplace safety laws and which initially drafted the heat rule in 2017, to prepare to re-introduce the rule as an emergency regulation this year, which allows faster approvals. Cal/OSHA’s deputy chief of health Eric Berg told the board his agency, too, was caught by surprise by the administration’s move.

A spokesperson for the Department of Industrial Relations – which oversees both the standards board and Cal/OSHA – said it was “evaluating options to strengthen protections as soon as possible” and would continue assessing workers’ complaints of indoor heat under a general rule requiring safe workplaces. The agency received 549 safety complaints related to indoor heat in 2023, and 194 the year before.

Cal/OSHA and the standards board have been developing the rule for years amid rising concerns about the health effects of climate change on workers. A 2016 law directed the agencies to create an indoor workplace heat rule by 2019 — five years ago.

The proposed rule would require employers to either try to cool workplaces that get hotter than 87 degrees indoors or take other measures to reduce the risks of heat illness. California faces a budget deficit projected at as much as $73 billion. Gov. Gavin Newsom and Democratic leaders in the Legislature announced Wednesday that they would try to reduce the shortfall by $12 billion to $18 billion before passing a full budget.

A 2021 RAND Corp. economic impact report estimated the costs of the indoor heat rule on employers statewide to total $215 million in the first year and about $88 million annually afterward, mostly for employers to install AC or fans or provide cool-down areas. The analysis also stated employers would save money because the rule would cut indoor workplace heat injuries by 40% by 2030.

For state government, the standards board last year estimated the Department of Corrections would need to pay less than $1 million in the rule’s first year and less than $500,000 annually after that to comply. About half of the state’s 1,500 correctional institutions are either already climate controlled or located in areas that won’t be hot enough to trigger the heat rule, the Department of Industrial Relations stated. That was after finance officials told the department in 2021 that it underestimated prison costs; the department said its updated analysis resulted in double the cost to the state.

The proposed rule was first drafted by Cal/OSHA in 2017 before going to the independent standards board for official rulemaking in 2019. After the board finally officially proposed the rule in March 2023 and held the public hearing, it also revised the rule three more times.

The rule has been subject to wide-ranging employer pushback and a lengthy economic impact analysis. The COVID-19 pandemic diverted attention from an understaffed state labor agency, CalMatters reported last month.

The proposed rule would require warehouses, factories, restaurants and other workplaces to cool workplaces down if the temperature reaches 87 degrees. If installing air conditioning isn’t feasible, employers would be required to take other measures such as adjusting schedules, allowing longer breaks or providing personal fans or cooling vests.