Workers' compensation fraud alleged by Chatsworth firm

Associated Press
October 23, 2006

LOS ANGELES - Three officers of a multistate flooring and carpet installation company have been charged with defrauding the state's biggest workers' compensation insurer of nearly $11 million, a Los Angeles County prosecutor said Monday.

Top officials at Cover-All Inc. underreported their payroll to the State Compensation Insurance Fund by nearly $32 million between September 2001 and April 2006, saving the company $10.98 million in premiums, said Deputy District Attorney Michael O'Gara, who brought charges in the case.

The company, based in Chatsworth in the San Fernando Valley, is a flooring subcontractor with 1,500 employees in 54 offices in 30 states, said Jonathan M. Levitan, Cover-All's general counsel. O'Gara said the company does 95 percent of its business for Home Depot.

"They're big, big contributors to the community," Levitan said. "It's not like you're talking about a renegade company."

Insurance fund auditors noticed the company's reported payroll under its workers' compensation insurance policy differed from what the company was reporting to the state's Employment Development Department, which collects payroll taxes and administers unemployment benefits.

"You mess around with that (Employment Development) agency and you can get in a lot of trouble," said Lauren Hersh, a spokeswoman with the California Department of Insurance, which investigated the case. "SCIF looked like an easier target. And that's where they got caught."

Prosecutors charged Gad Leshem, 59, Zeev Golan, 54, and Irit Golan, 52, all of Northridge, with four counts of premium fraud and one count of conspiracy Wednesday.

Leshem is the company's president and chief executive, Zeev Golan is vice president and his wife, Irit Golan, is the company's executive secretary and payroll supervisor, prosecutors said. The Golans are alleged to have prepared the fraudulent documents, which Leshem approved.


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