SAN DIEGO/SAN FRANCISCO -- In one of the largest workers’ compensation insurance fraud cases in San Diego County history, the owners of a San Diego area roofing company have been ordered to pay $3 million in restitution to the State Compensation Insurance Fund. San Diego Superior Court Judge William H. McAdam ordered Paul Frederick Mayer and David Gordon Archer, owners of Mayer Roofing, to pay full restitution to State Fund plus $81,649 in investigation costs after pleading no contest to felony charges of conspiracy and workers’ compensation insurance fraud. Judge McAdam also sentenced the company owners to three years of summary probation.

Along with Mayer, 52 and Archer, 62, two other officials of the company were previously sentenced in this case. Laura Elena Caballero, 36, and Judy Kay Toledo, 50, pleaded no contest to a misdemeanor charge of workers’ compensation insurance fraud and were both sentenced to three years summary probation.

The company officials were originally indicted by a grand jury in February of this year. From 2001 to 2003, company officers created a scheme that underpaid workers’ compensation insurance premiums by $3 million. They created false payroll records thus understating the company’s workers’ compensation premium.

“These unfair practices enable unscrupulous employers to underbid honest competitors,” San Diego County District Attorney Bonnie M. Dumanis said. “This results in honest employers losing jobs and ultimately driving them out of business.”

The fraud was first uncovered by a routine audit by the State Compensation Insurance Fund. State Fund investigators informed the San Diego County District Attorney’s Office of their suspicions about the company’s payroll and premium practices. Beginning in December 2004, the San Diego County District Attorney’s Office and the California Department of Insurance served a search warrant at six locations including Mayer Roofing Offices in San Diego, Riverside, and Los Angeles Counties. They seized 187 boxes of evidence.

“Directly or indirectly workers’ compensation premium fraud harms the system,” said State Fund President James C. Tudor. “Employers who commit such a crime gain an unfair advantage over their competitors who honestly and accurately report their premium fairly.”

Mayer Roofing was licensed in 1993, and does business throughout Southern California and Fresno. It employs nearly 450 employees and is engaged primarily in new home construction. The company is headquartered in Escondido and has offices in Riverside, San Fernando, and Bakersfield.

State Fund’s Fraud Investigation Program (FIP) addresses all aspects of workers’ compensation insurance fraud, including employee, employer, medical, and legal. In the last decade, State Fund’s FIP has produced hundreds of arrests and convictions in a wide range of workers’ compensation cases, including some considered milestones in California’s fight against fraud.

EDITOR’S NOTE: Established by the California Legislature in 1914, State Compensation Insurance Fund is a nonprofit, wholly self-supporting public enterprise carrier that provides workers’ compensation coverage to all California employers.