YUBA COUNTY, CA - Five individuals have been arrested in an alleged long-running scam to defraud the state Employment Development Department of an estimated $5 million plus in jobless and disability benefits, according to federal prosecutors.
According to the criminal complaint, the accused and a sixth man described themselves as farm labor contractors who provided workers to harvest crops in Yuba and Sutter counties.
The state and federal investigation found the individuals began forming their companies in 1989 and are alleged to have used the name Mohammed Khan, repeatedly hired and laid off each other and frequently changed the name of their businesses as well as used each other's business addresses.
The complaint alleges the accused charged at least 2,000 individuals approximately $250 for $1,000 in wages that the buyer didn't perform for the defendants' companies. Instead, the buyer claimed to have been laid off by the companies and would file for unemployment or disability benefits or both.
According to EDD, the individuals who claimed to have worked for these companies many times did not know where they worked nor their supervisor's name. Sometimes the earnings they reported were far more than the prevailing agricultural wage. Many of the workers purportedly employed by the companies were between 50 and 70 years old and claimed to have been hired to pick walnuts and peaches - hard physical work more likely performed by younger people.
Arrested Tuesday were Mohammad Shahbaz Khan, 56; Gurdev Kaur Johl, 67; and Kewal Singh, 74, all of Yuba City and Mohammad Nawaz Khan, 56 and Iqila Begum Khan, 31, both of Live Oak. A sixth man, Mohammad Adnan Khan, 32, of Live Oak, was charged but not arrested. A court hearing was set for Tuesday afternoon.
The FBI; U.S. Department of Labor, Office of Inspector General; and the EDD investigated and continue their probe into possible additional fraudulent activity, said Lauren Horwood, spokeswoman for the U.S. Attorney's Office, Eastern District of California.
If found guilty of the charges, the defendants each face a maximum of 20 years in federal prison.