CSLB Industry Bulletin - 11/05/2010
Roofing Contractor Nailed with 10-Year Prison Sentence for Failing to Follow Workers’ Compensation Law
SACRAMENTO - One of the largest-ever premium insurance fraud cases in California has ended with a sentence of 10 years in state prison and $500,000 in restitution for southern California roofing and general contractor Michael Vincent Petronella. Petronella was convicted on 33 counts of insurance fraud, with an enhancement for aggravated white collar crime over $500,000. A trial is pending for his wife, Devon Lynn Kyle, who was also arrested in the case.
The Contractors State License Board (CSLB) assisted the Orange County District Attorney’s Office with the investigation that led to the 2009 arrest of the Petronellas. The couple operated the Petronella Corporation, Reroofing Specialists, and Western Cleanoff, Inc. throughout southern California.
The Petronellas obtained insurance for their businesses through the State Compensation Insurance Fund (SCIF) in 2000. SCIF discovered fraud in 2006 after an employee fell from a roof and submitted a claim that listed the employer as Western Cleanoff, Inc., which had no CSLB license and was not insured by SCIF. SCIF reported the fraud, initiating the investigation, which discovered that between 2000 and 2008, the couple submitted fraudulent insurance claims and underreported millions in payroll. That led to Petronella’s criminal conviction, as well as license suspension for failure to carry workers’ compensation, and pending disciplinary action to revoke his contractor licenses (857998 and 460707).
CSLB and its partners in state and local government, law enforcement, and the construction industry have intensified efforts to combat premium insurance fraud, including conducting hundreds of stings and sweeps year-round throughout the state. Governor Arnold Schwarzenegger signed CSLB-sponsored Senate Bill 1254 into law this fall that will give CSLB unprecedented authority to immediately issue a "stop work order" to any licensed or unlicensed contractor that has not secured workers’ compensation insurance for employees. The law becomes effective January 1, 2011. Failure to comply with the stop work order will result in misdemeanor charges, punishable by up to $10,000 and/or up to 60 days in jail.
In September, CSLB met with more than 50 of these partners at its Sacramento headquarters. Those in attendance pledged to provide ideas to assist state agencies and local law enforcement that will help identify and prosecute those who violate workers’ compensation and other state business and contracting laws.