Workers at some of the most elite hotels in Southern California were victimized by a couple accused of failing to pay overtime and defrauding the state out of millions in taxes, prosecutors allege.
A Southern California couple are accused of using a dozen shell companies to hide at least 800 hotel cleaning employees for nearly a decade in a $7 million insurance fraud and tax evasion scheme, state officials announced Monday.
A grand jury indicted Hyok "Steven" and Woo "Stephanie" Kwon Monday for allegedly misrepresenting the size of their payroll to avoid paying state fees and taxes. Steven pleaded not guilty Monday and is being held on a $1 million bail.
The Kwons owned and ran a number of companies including Good Neighbor Services. Their clients included Loews Coronado, Hotel del Coronado, La Costa Resort and Spa, Four Seasons, Grand Del Marin La Jolla, L'Auberge Del Mar, Los Angeles Airport Hilton and the Ritz Carlton properties in Orange County and Los Angeles, among others.
The 12 shell companies had offices in the Bay Area, Los Angeles and Irvine, as well as Lake Tahoe, prosecutors allege.
"The Kwons treated hundreds of their hotel workers like chattel," said insurance commissioner Dave Jones, adding that employees told investigators they were not paid for overtime and were not paid when hurt on the job.
The husband and wife team is accused of workers compensation premium fraud, payroll tax evasion and extortion.
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Officials estimate the company avoided paying more than $3.6 million in insurance premiums and more than $3.3 million in payroll taxes.
"This is the one of the largest ever in San Diego County of insurance fraud and tax evasion fraud,"said District Attorney Bonnie Dumanis. "It’s not a victimless crime."
The Kwons have been appointed a public defender. If convicted of all charges, they each face up to 31 years in prison.
Six co-defendants face charges as part of the investigation. They are Melquiades Brizuela Jr, Manuel Rodriguez, Veronica Lucas Cuin, Aimee Sunmyung Kwon, Daniel Kwon and Hyun Bung Chae. It wasn't immediately clear if the accused have hired attorneys who could comment on the charges.
Anyone with information about the abuse of employee rights or the Kwons' use of shell companies can call: 800-315-7672 or 800-927-4357.
