Fraud Roundup

Calif. State Fund receives $100,000

Los Angeles Superior Court Judge David Horwitz ordered Rogelio Mata, owner of Rogma Construction Services, to serve three days in county jail and pay $100,000 in restitution to the California State Compensation Insurance Fund, after pleading no contest to one count of insurance premium fraud.

Mata operated Rogma Construction Services out of his Los Angeles home, and represented his company to SCIF as a construction cleanup service, rather than a construction demolition company. Construction demolition requires a more expensive category for workers’ compensation premiums, SCIF said. Rogma Construction Services had 15 to 20 employees, and while Mata reported the correct total payroll to State Fund, he reported it in a lesser-rate class code to pay less for his premiums. Mata had been insured with SCIF from 1985 to 2005.

The fraud was discovered after SCIF received a tip from one of Rogma’s business competitors. The Los Angeles District Office fraud liaison then conducted an investigation of Rogma’s business records, and found all had interior demolition work done by Rogma.

In addition, State Fund’s Fraud Investigation Program found that Rogma Construction Services had taken part in the television show “Extreme Make Over, Home Edition” as an interior demolition contractor. Rogma Construction’s Web site also listed the interior demolition services it performed.

Charges were filed against Mata in Sept. 2006 by the Los Angeles District Attorney’s Office. Mata was originally charged with four counts of workers’ compensation insurance premium fraud.

“Misclassification is a serious problem within the construction industry,” said prosecuting attorney Michael O’Gara of the DA’s Office.

Former students win $9 million settlement

Washington students who alleged they were defrauded by the defunct Business Computer Training Institute have won a $9 million settlement and may get tens of millions more.

An insurer for BCTI, once based in Gig Harbor, Wash., agreed to pay $9 million to settle claims that the school preyed on low-income students, charging them almost $11,000 for 30 weeks of computer training that some instructors argued wasn’t worth it.

A tentative agreement the students reached with BCTI could yield an additional $55 million from a second insurance company, The News Tribune of Tacoma, Wash., reported.

If approved by Pierce County Superior Court Judge Thomas Larkin, the settlement would close one phase of a class-action lawsuit filed two years ago, just before BCTI closed its seven campuses in Washington and Oregon.

The lawsuit claims BCTI targeted low-income students with promises of high-tech training and good-paying jobs. Instead, students say they received substandard training and low-paying jobs, for example, at fast-food restaurants and convenience stores.

A News Tribune investigation last year found that BCTI recruited students outside welfare and unemployment offices, sometimes in violation of state law. BCTI pressured recruiters to meet enrollment quotas and fired them when they fell short.

Instructors said they were pressured to keep unqualified students enrolled so the school could collect their financial aid from federal and state governments; Some said the curriculum was flawed and riddled with errors, the newspaper reported.

The News Tribune could not reach BCTI attorney Thomas Merrick for comment by press time. In written statements and in court filings, BCTI owners Tom Jonez and Morrie Pigott denied any wrongdoing.

They said the school sought to help troubled students, that they held recruiters to high ethical standards, and that many BCTI graduates are happy. They also said students signed disclaimers acknowledging that BCTI could not guarantee employment or wages.

Some details of the settlement have yet to be worked out, including how the money will be divided among the 28,000 former students who attended BCTI from 1985 to 2005.

Darrell Cochran, an attorney for former BCTI students, said the parties have an “agreement in principle” on a stipulated judgment for an additional $55 million. The figure represents one-tenth of the estimated economic damages for the students who attended BCTI.

Cochran said that money would have to come from a second insurance company, which he declined to identify, that has refused to acknowledge that its policy would cover such damages.