- Created on Monday, 23 June 2014 20:16
- Written by FBI
Yuba City, California - An ongoing investigation into an unemployment and disability benefits fraud scheme has led to the indictment and arrest of four Sutter County residents for their participation in the scheme and a superseding indictment bringing additional charges against others previously named as defendants, announced United States Attorney Benjamin B. Wagner, U.S. Department of Labor, Office of Inspector General Special Agent in Charge Abel Salinas, FBI Special Agent in Charge Monica M. Miller, and Employment Development Department Investigation Division Chief Lisa Schmith.
The Sutter County-based scheme used farm labor contracting companies to sell false paystubs that indicated the purchasers had been employed by the companies when it fact they had not. These fraudulent paystubs enabled the purchasers to apply for unemployment and disability benefits to which they were not entitled. The fraud scheme is alleged to have defrauded the California Employment Development Department of more than $14 million.
The federal grand jury returned a superseding indictment yesterday that expands the original charges brought in 2012 against six defendants. The grand jury also returned a new indictment charging one of those defendants and another man with starting a new scheme to sell false wages. Two new defendants were also charged in that indictment with committing perjury before the investigating federal grand jury.
The superseding indictment charges that Mohammad Nawaz Khan, 56; Mohammad Adnan Khan, 31; Iqila Begum Khan, 31, all of Live Oak; and Mohammad Shahbaz Khan 56, of Yuba City, controlled a series of companies that were reported to the Employment Development Department as farm labor contractors. The Khans, together with Gurdev Kaur Johl, 69, and Kewal Singh, 76, both of Yuba City, who were also charged, sold fake paystubs to other people in the community and used the companies they controlled to report false wages for the individuals who purchased those paystubs. According to the superseding indictment, the Khans at times instructed the purchasers how the fake paystubs could be used to fraudulently claim unemployment and disability benefits. Over the course of the conspiracy, which allegedly began in the early 1990s, the defendants reported false wages for more than 1,000 separate individuals that resulted in more than 2,000 fraudulent claims for unemployment and disability benefits.
The new indictment charges that while out on bond for the first indictment, Mohammad Shahbaz Khan began a new conspiracy with Mohammad Riaz Khan, aka Ray Khan, 53, of Live Oak, to commit unemployment and disability fraud. It is alleged in the indictment that Mohammad Riaz Khan issued checks to his supposed employees and directed those individuals to cash the checks and return the money to him in order to make it appear that the individuals were actually being paid wages by Mohammad Riaz Khan. Also in that indictment, Harmit Chechi, 27, of Yuba City, and Harjit Johal, 47, of Yuba City, are charged with committing perjury before a federal grand jury in connection with that investigation. Mohammad Riaz Khan, Mohammad Shahbaz Khan, Chechi, and Johal were arrested this morning.
“The indictments returned yesterday allege that the defendants ran a scheme that ripped off the Employment Development Department for many years,” said U.S. Attorney Wagner. “Those responsible for this scheme are likely to end up in prison, and those who purchased false wages from them should come clean rather than try to conceal the scheme. Today, two people were arrested on charges of lying to the grand jury, and more people are under investigation for perjury. Obstructing a federal fraud investigation is unacceptable, and those who engage in such conduct will face the full weight of federal law enforcement.”
“Despite indictments of more than 20 individuals in 2012 and 2013, allegations of continued criminal activity persisted,” said Monica M. Miller, Special Agent in Charge of the Sacramento division of the FBI. “Continued, open contribution among EDD, DOL-OIG, and the U.S. Attorney’s office ensured a thorough and successful investigation, and we are thankful for the opportunity to work together to protect the integrity of government at all levels.”
“Any fraud against the employer-funded Unemployment Insurance Program or the employee-funded Disability Insurance Program is unacceptable,” said Patrick W. Henning, Jr., Director of the California Employment Development Department (EDD). “The EDD is committed to protecting these vital programs and working with our law enforcement partners to prosecute offenders to the fullest extent of the law. And we will soon become only the second state in the nation to employ the latest in technology and predictive analysis tools to identify new fraud trends and prevent benefit fraud.”
This latest indictment brings the total to 28 individuals who have been charged in this investigation. Thirteen have pleaded guilty to various charges. A status conference as to Mohammad Nawaz Khan et al. is schedule for June 26, 2014 at 9:00 a.m. before Chief U.S. District Judge Morrison C. England Jr. A jury trial is scheduled for January 12, 2015.
This case was the product of an investigation by the U.S. Department of Labor, Office of Inspector General; the Federal Bureau of Investigation; and the Employment Development Department-Criminal Investigations. Assistant United States Attorneys Jared C. Dolan and Sherry D. Hartel Haus are prosecuting the cases.
If convicted, each defendant faces a maximum statutory penalty of 20 years in prison and a $250,000 fine for each count. Chechi and Johal face a maximum statutory penalty of five years in prison for perjury. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges in the indictments are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.