A Pasco farm contracting business was shut down and its owners ordered to pay more than $685,000 in restitution for paying employees under the table to avoid paying industrial insurance premiums.
Clemente Ezquivel, 51, and his wife, Rosalva, 46, intentionally underreported 1,564 workers for a total of 227,527 worker hours between April 2005 and December 2007, court documents said.
The couple owned J&C Contracting, a business that provided labor to area farmers to harvest onions, asparagus and other hand-harvested vegetables in Othello and Pasco.
A fraud investigator with the Washington State Department of Labor & Industries began investigating the company in February 2007 after receiving an anonymous tip that the company was maintaining two sets of books to avoid paying industrial insurance premiums.
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The couple were ordered to pay $258,000 in restitution to L&I, according to a release issued Wednesday.
"This is a staggering case of an employer taking advantage of workers to line their own pockets," Carl Hammersburg, L&I fraud prevention and compliance program manager, said in the release. "Honest employers are the ones that pick up the tab when dishonest employers commit this type of fraud."
The Ezquivels were charged in December 2009 in Franklin County Superior Court with false information by an employer and since have pleaded guilty.
They were sentenced to 45 days in jail, according to online court records. Rosalvo Ezquivel can serve her time on work crew, if eligible.
The couple also were ordered to pay total restitution of $685,353, including the $250,000 to L&I. They also face an array of fines.
During the fraud investigation, L&I officials also learned the Employment Security Department had completed a tax audit on the business for 2005 and 2006 and found J&C Contracting "significantly underreported their tax liability," documents said.
The business had been operating since 1994 and was given written and verbal instructions on how to properly record and report employee work hours, documents said.
Investigators questioned the company bookkeeper, who reported she had been working there for three years and had prepared payroll and filed quarterly tax reports.
She said it was difficult to get records from Rosalva Ezquivel and her field supervisors so she would often have to estimate hours worked by employees for the quarterly reports.
L&I officials, however, noted they only received one quarterly tax report for the fourth quarter of 2006.
Rosalva Ezquivel told L&I investigators in September 2007 that she no longer contracted for J&C Contracting and was instead working for her daughter's farm labor contracting business, Jobs R Us Contracting.
She admitted to investigators that she had had previous audits but did not often keep records, especially records of cash payments to employees.
Ezquivel also said she paid medical bills herself when a worker was injured and would normally would give that worker two days of paid leave when the employee recovered, documents said.
Investigators got a warrant to get access to the couple's personal and business bank records at Banner Bank and reconciled them with the bookkeeper's electronic records.
The records showed checks identified as payroll checks were cashed and processed by the bank, but also that the business account had 212 cash withdrawals totaling $552,174.70, and the personal account had 39 cash withdrawals for $113,761.68.
Investigators said the bank records verified Rosalva Ezquivel's statement that she paid workers in cash, and they identified 1,564 workers that the employer failed to report, documents said.
Assuming the workers were paid the average hourly wage, J&C Contracting should have paid $213,817.22 in industrial insurance premiums, documents said.