Calif. business owners charged in $4.5M comp fraud scheme

Husband and wife business owners stand charged in a $4.5 million workers compensation fraud scheme in which an investigation revealed alleged underreported payroll and wage theft, the California Department of Insurance announced Thursday.

Wei Wen Wu, 54, and Feng Wen Lam, 49, both of Arcadia, California, are charged with 43 felony counts of insurance fraud, grand theft, and conspiracy after allegedly underreporting nearly $4.5 million in employee payroll.

The scheme fraudulently reduced their company’s workers compensation insurance premium resulting in a loss of approximately $1.7 million in unpaid insurance premiums.

The couple owns Golden Food Inc., a chicken processing business employing butchers and meatpackers located in El Monte, California.

The Department of Insurance launched an investigation after receiving a referral from State Compensation Insurance Fund suspecting the business of fraud after comparing the payroll reported during annual audits with the payroll reported to the state Employment Development Department.

After obtaining search warrants for GFI, the Department was able to obtain the true payroll records from the company’s computer and found fake tax reporting forms. The investigation revealed between 2015 and 2021, GFI underreported its payroll to its workers compensation insurers by $4,489,390, resulting in a loss of $1,681,138 in unpaid insurance premiums to four insurance companies, including State Fund.

The couple also allegedly forced workers to clock out for breaks and continue to work, did not pay overtime for work in excess of 40 weekly hours, and falsified pay stubs, according to the department’s investigation.