Two True Religion Apparel Sub-Contractors Arrested for Fraud Scheme
Two sisters who ran separate garment factories working for True Religion were arrested with their accountant on April 15 for allegedly trying to defraud the state workers’ compensation insurance funds.
Sung Hyun Kim, head of Meriko Inc.; her sister, Caroline Choi, who ran SF Apparel Inc., both in Vernon, Calif.; and their accountant, Jae Kim, were arrested on 18 felony counts of workers’ compensation insurance fraud that totaled more than $11 million in losses.
The three are accused of conspiring to underreport $78.5 million in payroll to multiple insurers, including the State Compensation Insurance Fund and two insurance companies owned by Berkshire Hatha way, to avoid paying workers’ compensation insurance premiums.
The alleged fraud was committed by fabricating payroll records provided to insurance carrier auditors. State Fund notified detectives from the California Department of Insurance when they discovered payroll reports showed significantly fewer total payroll numbers than similar reports given to the California Employment Development Department. Evidence allegedly showed that many employees were paid under the table. True Religion is not suspected of any wrongdoing, investigators said.
The two sisters were booked into the Los Angeles County Jail, and Jae Kim was booked into the Men’s Central Jail in Los Angeles. The trio was tentatively scheduled to be arraigned in Los Angeles County Superior Court on April 17.