Salvatore Constanzo, owner of three local bars, was ordered to pay more than $66,000 to State Compensation Insurance Fund in restitution for defrauding the workers’ compensation insurance carrier.

Constanzo, who owns Sideline Sports Bar in Arcata, Sal’s Off Broadway and the Myrtlewood Lounge in Eureka, was accused of defrauding the insurance carrier by underreporting payroll, misclassifying and failing to report wages that were paid in cash, said Jim Zelinski, a spokesman for State Fund.

“We originally started insuring him in September of 1992,” Zelinski said. “There was a claim filed by one of the workers in December ’03 and one of the things that we eventually learned was the worker who filed the claim said that she had been paid under the table.”

Shortly after, State Fund and the California Department of Justice, in cooperation with the Humboldt County District Attorney’s Office started, an investigation, he said.

“He underreported payroll and a young woman claimed that she was injured on the job and there was no record of her as an employee,” said Victor Ferro, an attorney with Mitchell, Brisso, Delaney and Vrieze, who represents Constanzo. “State Comp. then conducted an investigation and he was charged with being inaccurate in payroll and not paying the correct premium. (They) went back to 1999, negotiated a deal and (he) paid all premiums.”

Constanzo pled no contest to one misdemeanor, was fined $460 by the court and ordered to serve two years’ unsupervised probation, which means he must obey all laws, Ferro said.

“He was paying premiums every year and state comp said, ‘Had you reported correctly your premiums, (it) would have been an additional ($66,355),’” he said.

Constanzo paid the additional fines and in April started having all his accounting done through a firm, Ferro said.

Humboldt County District Attorney Paul Gallegos said people who accept money from employers can also be prosecuted, but his office would not prosecute something of that nature.

“The (Internal Revenue Service) or the State (Tax) Franchise Board deals with these types of offenses,” he said.