Two Southern California brothers who own multiple towing companies have been arrested for allegedly defrauding insurance companies out of nearly $6 million by underreporting employee payroll.
The California Department of Insurance announced that Mark Hassan, 46, of Corona Del Mar, and Ahmed Hassan, 35, of Walnut, misrepresented payroll for their businesses to pay lower workers’ compensation premiums. Investigators say the brothers paid employees under the table, reducing reported payroll.
The investigation began after the department received three fraud referrals, which prompted a review of several companies owned by the Hassans, including Hadley Tow in Whittier and California Heights Tow in Walnut.
The brothers reported a combined payroll of $3 million to their insurers, but an audit revealed the actual payroll should have been $16.7 million. The California Department of Insurance said the scheme resulted in an estimated premium loss of $5,897,487.
Authorities also allege that Mark Hassan created a shell company to conceal Hadley Tow’s true payroll and further defraud workers’ compensation carriers.
The alleged misconduct prompted the Employment Development Department to open a payroll tax evasion investigation as well.
Officials reminded the public that underreporting payroll to reduce insurance premiums is illegal, as it undermines the insurance system and jeopardizes benefits for injured workers.
“The illegal actions not only defraud insurance carriers but also hinder injured employees’ access to necessary support,” the department said.
