Insurance scammers face sentencing this week

In two separate Santa Clara County workers’ compensation insurance fraud cases, a child therapist and San Jose father and son business owners will face serious sentences for committing felony fraud, according to authorities. 

Mark Anthony Ramos, 50, of Escondido, owner of Stars Bay Area Therapy Group and Stars Bay Area, Inc., will be sentenced in August to three years in prison, suspended to six months in county jail upon paying full restitution, says a press release from Santa Clara County District Attorney Jeff Rosen’s office. Ramos’ crimes occurred while Stars Bay Area did business in various locations, including Hollister.

Edgardo Cabrales Sr., 62, and Edgar Cabrales Jr., 37, will be sentenced this week to probation for 10 years for their $4 million scheme through their commercial cleaning companies, as both have completed 18 months in a county jail alternative program, the press release says. Prior to pleading guilty, they paid more than $1 million in restitution.

Rosen said the cases illustrate the persistence and peril of failing to maintain mandatory workers’ compensation insurance to cover employees in the event of an accidental on-the-job injury.

“If you don’t pay to protect your employees, you will pay in a far more serious way,” Rosen said. “People who illegally avoid paying proper premiums are cheating the insurance companies, their workers, and every business that plays by the rules.”

Ramos pleaded guilty earlier this year to insurance fraud, according to the DAs office. Stars Bay Area, operating in Santa Clara County, Hollister and Southern California, provided therapy to children from birth to age 3 for behavioral, occupational and pediatric speech needs.

From 2015 to mid-2022, Ramos defrauded his workers’ compensation insurance carriers by significantly underreporting employee payroll, authorities said. He used various tactics—including different corporate names, underreporting employees and falsely claiming that employees only provided telehealth services—when in reality, they worked directly with children in the field. 

The DA’s investigation benefited when a Stars staff member inadvertently sent a correct payroll number of approximately $3 million to a carrier, revealing a vast discrepancy compared to the initial $132,000 previously reported by Ramos, the press release says. When confronted, Ramos simply exclaimed, “How the hell did you get that bill!?!” As a result of the fraud, the carriers suffered losses exceeding $288,000.

The Cabraleses own two commercial cleaning companies in San Jose: Pine Building Maintenance (PBM) and Network Facility Management (NFM), says the release. An investigation by the California Department of Insurance began in 2019 after the State Compensation Insurance Fund (SCIF) suspected the businesses of fraud. 

The investigation revealed that since 2016 the Cabraleses had only secured insurance coverage for some of their PBM employees, but never secured a workers’ compensation insurance policy to insure their NFM employees, even though most of their business was operated through NFM.

The father and son accomplices failed to report wages to SCIF to save money on insurance, resulting in $4.2 million in lost premiums, Rosen’s office said.