Two brothers who operate several towing companies across Southern California have been arrested for their alleged involvement in a multi-million-dollar workers’ compensation insurance fraud scheme.
Mark Hassan, 46, of Corona Del Mar, and Ahmed Hassan, 35, of Walnut, were taken into custody on March 11 on multiple felony counts of insurance fraud, according to the Los Angeles County District Attorney’s Office.
Prosecutors allege the brothers defrauded workers’ compensation insurance companies by significantly underreporting employee payroll and paying parts of workers’ wages in cash to avoid insurance premiums.
The investigation was launched by the California Department of Insurance after an insurance provider issued two fraud alerts involving Mark Hassan, the owner of Hadley Tow, claiming the company had underreported payroll.
A third fraud alert targeted Ahmed Hassan, who owns California Heights Tow, after he allegedly filed a fraudulent employee injury claim under his insurance policy on behalf of a worker from Hadley Tow.
At the time of the alleged scheme, Mark Hassan also owned FMG Inc. and operated several towing businesses across the region, including Courtesy Tow, Crescenta Valley Tow, and California Coach Towing, along with other towing operations throughout Southern California. Authorities say he also held towing contracts with several law enforcement agencies in the region.
Investigators claim Mark Hassan used Courtesy Tow, which allegedly lacked workers’ compensation insurance, as a shell company to conceal portions of Hadley Tow’s payroll and avoid paying required insurance premiums.
Ahmed Hassan is also accused of underreporting wages at his company in order to reduce workers’ compensation insurance costs.
According to prosecutors, the brothers also paid some employees partially or entirely in cash without withholding taxes or standard deductions. This prompted the California Employment Development Department to open a separate investigation into possible payroll tax evasion.
Insurance filings from Hadley Tow and California Heights Tow reported a combined payroll of $3,038,164. However, a forensic audit allegedly found the companies’ actual combined payroll totaled $16,716,657, resulting in an estimated $5,897,487 in unpaid insurance premiums.
In a statement, the California Department of Insurance said underreporting workers’ compensation payroll undermines the insurance system, shifts costs to other policyholders, and can jeopardize benefits for injured workers.
Following their arrests, Mark Hassan was booked at the LASD Inmate Reception Center, while Ahmed Hassan was booked at the West Valley Detention Center.
The case is being prosecuted by the Los Angeles County District Attorney’s Office.
