Two clothing manufacturing executives will be arraigned Friday in a workers’ compensation fraud case involving losses estimated to be nearly $12.5 million, the Los Angeles County District Attorney’s Office said.
Sung Hyun Kim, 57, and Caroline Sung Choi, 59, are expected to make their initial court appearance in Department 30 of the Foltz Criminal Justice Center. Co-defendant Jae Young Kim, 71, pleaded not guilty Thursday to nine counts of workers’ compensation fraud.
Sung Hyun Kim also is charged with nine counts of workers’ compensation fraud. Sung Hyun Kim and Choi, who are sisters, each face nine counts of failure to pay state payroll taxes.
Sung Hyun Kim and Choi are corporate officers for Meriko, Inc., and its successor, SF Apparel, both garment manufacturing companies that make high-end brand jeans such as True Religion, according to a statement from the District Attorney’s office.
Sung Hyun Kim and Jae Young Kim, an accountant, are accused of underreporting $78 million in payroll to more than a half-dozen insurance carriers beginning as early as 2006, it said.
“By not reporting accurate figures, which can also be accomplished by paying employees in cash, companies avoid paying mandatory employer contributions for unemployment and disability,” the statement said. “Companies pay significantly reduced workers’ compensation premiums when they underreport the number of employees and the amounts actually paid.”
In this case, the estimated losses are roughly $11.7 million. Losses to the state’s Employment Development Department for unpaid employer contributions are estimated at more than $700,000.
Sung Hyun Kim faces up to 28 years in state prison, Jae Young Kim faces a potential 22-year prison term, and Choi could spend 15 years, four months behind bars, the D.A.’s office said.
In an unrelated case, a 67-year-old woman who ran a janitorial company in Sherman Oaks and a 49-year-old accountant pleaded no contest Monday to charges in a similar payroll scam.
Chan Yee Yang pleaded no contest to one count each of workers’ compensation fraud, failure to file a tax return, filing a false tax return and presentation of a fraudulent claim. Andrew Kim also pleaded no contest to one count each of workers’ compensation fraud and presentation of a fraudulent claim.
Yang ran Bell Building Maintenance. She is accused of working with Kim to underreport her company’s payroll to ensure her insurance premiums were low. Total losses are estimated to be $4.4 million, according to the D.A.’s office.
—City News Service
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