Silicon Valley Firm Accused In $3.2M Insurance Fraud Scheme

SANTA CLARA VALLEY, CA — A 55-year-old San Jose man who owns a security company has been arrested on suspicion of cheating his insurer out of $3.2 million, officials with the California Department of Insurance said Friday. Troy Carson of Security Code 3, Inc., listed at 1735 N. First St. in San Jose, allegedly underreported his payroll expenses by more than $12 million in an attempt to lower his worker's compensation costs.

Detectives began to investigate the company after allegedly finding irregularities in how employee injuries were reported. Security Code 3 allegedly discouraged its workers from reporting on-the-job injuries.

Investigators allege Carson created a new company and fabricated the number of employees and how much he was paying them to reduce his insurance premiums under false pretenses. On paper there were two companies, but investigators allege they functioned as one.

San Jose residents Victoria Cruz and Lanette Wiegand, both 46 years old, as well as Jaime Lugo, a 60-year-old resident of La Crescenta, are also suspects in the case.

Department of Insurance officials said that together, the four are facing a total of 18 felony counts of workers' compensation insurance premium fraud.

By Bay City News Service

Photo: Shutterstock.com