Owners of Southern California towing empire arrested in $6 million fraud scheme

Summary

• Brothers Mark and Ahmed Hassan were arrested for allegedly defrauding workers’ compensation insurers of nearly $6 million in premiums.

• The scheme involved underreporting payrolls by more than $13 million and using “shell companies” to hide employees’ wages and avoid tax withholding.

• The investigation has now turned into a payroll tax evasion case involving the Employment Development Department.

LOS ANGELES – Two Southern California Towing company owners are facing multiple felony insurance fraud charges following a major investigation into premium theft.

Authorities allege the brothers systematically underreported employee wages to avoid paying millions of dollars in required workers’ compensation insurance.

What do we know?

Mark Hassan, 46, and Ahmed Hassan, 35, were arrested after a California Department of Insurance investigation revealed they reported only $3 million in payroll, when the actual figure was more than $16.7 million.

Mark Hassan allegedly used an uninsured “shell company”, Courtesy Tow, to conceal the earnings of employees at his main business, Hadley Tow.

The investigation also alleged that the brothers paid employees in cash and did not take standard deductions.

Mark Hassan, who runs multiple towing businesses Los AngelesHe had active contracts with various law enforcement agencies in Southern California at the time of his arrest – including Hadley Tow, Courtesy Tow, and California Coach Towing.

what we don’t know

It is currently unclear how long the alleged scheme was in operation before the initial fraudulent referrals were made.

while Los Angeles District Attorney’s Office is prosecuting the case, specific trial dates and possible maximum prison sentences for each brother have not yet been made public.

what do they say

Experts from the Ministry of Insurance emphasized that such frauds “undermine the financial stability of the insurance system” and “pass the costs on to other policyholders.”

Such illegal actions create “unfair competition,” allowing fraudulent businesses to gain an advantage over unethical competitors while also jeopardizing the benefits of injured workers, officials said.

What’s next?

The case was transferred to the Los Angeles County District Attorney’s Office for prosecution.

Simultaneously, the Employment Development Department (EDD) is expected to continue its own investigation into payroll tax evasion resulting from the brothers’ failure to withhold employee taxes.

Source

This report is based on information from the California Department of Insurance.