SoCal brothers arrested for $6M workers’ comp insurance fraud

Two brothers, who own a number of towing companies across Southern California, were arrested after being accused of lying about employee payroll and defrauding insurance companies out of nearly $6 million of insurance premiums, state authorities announced Wednesday.

The California Department of Insurance said Mark Hassan, 46, of Corona Del Mar and Ahmed Hassan, 35, of Walnut, underreported employee payroll by paying their workers under the table, thus paying lower workers’ compensation insurance premiums.

The investigations were launched against the brothers after the Insurance Department received three fraud referrals, prompting officials to examine several companies owned by the brothers, including Hadley Tow in Whittier and California Heights Tow in Walnut.

In all, the Hassan brothers reported a total payroll of $3 million to their insurance companies, but an audit showed their accurate payroll should have been $16.7 million, the department explained.

“The illegal actions resulted in an estimated premium loss of $5,897,487,” the state agency said in a statement.

Mark Hassan is also accused of creating a shell company to hide the paper trail for Hadley Tow’s employee payroll and defraud workers’ compensation carriers of premiums.

The brothers’ alleged fraud also prompted a payroll tax evasion investigation by the Employment Development Department.

Officials reminded Californians that underreporting of workers’ compensation insurance is illegal as it undermines the financial stability of the insurance system.

“It also jeopardizes the availability of benefits for injured workers, hindering their access to necessary support,” the department said.