Prosecutor: Defendant Did Not 'Play by the Rules'

By City News Service

The owner of a Thousand Palms landscaping company cheated insurance companies out of hundreds of thousands of dollars in a fraud scheme rooted in the misclassification of workers, a prosecutor said Thursday, but the defendant’s attorney argued his client was a gardener, not a bookkeeper, and had no hand in manipulating figures.

“This defendant had office managers and brokers signing off on paperwork so that if he got caught, he could say, ‘It was an accident, a mistake,”’ Riverside County Deputy District Attorney Frank Donzanti said in his opening statement in the trial of Jesse Garcia Contreras. “All the while, he was continuing this scam and not playing by the rules.”

Contreras, 59, of Indio is charged with six felony counts of workers’ compensation insurance fraud that carries a maximum penalty of 20 years behind bars. Prosecutors allege he ripped off five companies to the tune of $611,960.

Donzanti outlined a case pointing to willful deception, perpetrated year after year. According to the prosecutor, Contreras became the co-proprietor of Sunshine Landscape in 2001, handling all administrative functions. Donzanti alleged that Contreras was trying to find ways early on to save on payroll, eventually finding the means by lying about his employees’ functions.

“The key to success was, don’t tell the insurance companies you have tree trimmers on the job,” the prosecutor said. “The workers comp premiums for tree trimmers are triple what they are for general landscapers. Tree trimmers work at altitude They can fall, crack their head open or break their neck.”

According to Donzanti, from 2008 to 2013, Contreras “hid the fact” that he had tree trimmers in the field by changing the human resources codes assigned to employees and ultimately reported to the state, as well as the insurance companies.

“There was no disclosure of tree trimmers,” he said. “And when there were red flags raised and year-end audits coming, guess what -- the defendant switched to a different insurance carrier.”

Donzanti said holding down overhead by intentionally misclassifying his workforce afforded Contreras the opportunity to “outbid other landscapers playing by the rules,” assuring Sunshine Landscape would get lucrative contracts from Coachella Valley homeowners’ associations.

Defense attorney Jeff Moore characterized the government’s case as based on misplaced “assumptions” and confusion over business practices.

Moore took jurors through a lengthy explanation of Sunshine Landscape’s history and his client’s duties, noting that Contreras was “in charge of field operations,” not accounting.

“He was not the insurance procurer,” Moore said. “He was the guy who went out and got the contracts.”

According to the attorney, Contreras had worked for Sunshine nearly three decades as a gardener before he got together with two other men -- Santos Alvarado and Richard Calhoun -- to buy the company in 2001 from desert businessman Robert Lee Sandifer. The trio did business as Sunshine Landscape but were incorporated as CAC.

Moore said the case becomes “complicated” as a result of the ongoing relationship with Sandifer, who continued to manage human resources aspects of Sunshine’s operations, along with his office manager, Carol Marek. The attorney said the two of them signed off on time sheets and other documents.

According to Moore, Sandifer’s and Marek’s services were used until 2009, when CAC hired Atlas Resources to manage payroll and tax administration.

“Everything was submitted to Atlas starting in June 2009. Atlas was hiring workers comp insurance companies,” Moore said.

He said during this time, there were allegations of payroll fraud, triggering an insurance investigation that hit a “dead end.”

“There was confusion going on -- not fraud,” Moore told jurors.

He said an independent audit culminated in “a lot of mistakes and assumptions,” including an allegation that up to $1.5 million was withheld from insurance companies. That figure was eventually slashed to $611,000, and Moore doubted the legitimacy of that amount.

“Jesse Contreras did not commit fraud,” he said.

The firms allegedly victimized were the State Compensation Insurance Fund, CastlePoint Insurance, Liberty Insurance, Lumberman’s Insurance and Zenith Insurance.

Contreras was free on $100,000 bail.