The Ventura District Attorney did not criminally prosecute a Ventura County temporary staffing company that prosecutors say operated for years without workers’ comp coverage, used forged certificates of insurance, backdated hire dates to get coverage, and obtained sham workers’ comp coverage. The district attorney allowed the firm and its principals to agree to a stipulated civil judgment, which allows it (and them) to remain in business.
There was no admission of guilt by owner Miguel Angel Navarro or the companies in the agreement. Man Staffing, its various alter egos, and executives agreed to pay $650,000 to settle civil claims brought by the Ventura County District Attorney and to obtain legitimate workers’ comp coverage. Failing to meet the terms of the deal would ramp up the penalties.
Case Background
Court documents show that the Ventura County District Attorney’s office spent hundreds of hours investigating the operation over three years and found only three brief periods when legitimate workers’ compensation coverage was in place. During the period, the DA says it employed up to 1,000 temporary employees who were leased to businesses throughout Ventura County.
The District Attorney says they identified at least 4 certificates dating back to 2015 that Man Staffing used, which were either forged or fraudulently altered. “During this time period, Defendants routinely provided these certificates to their clients or to other insurance companies when asked about their workers’ compensation coverage. Defendants also provided these forged certificates to applicant attorneys or other insurance companies when they were sued by injured workers attempting to obtain medical and health coverage,” the complaint alleged.
The MEWA
Prosecutors say that Man Staffing was, at times, a client of the illegal MEWA run by Marcus Asay between 2017 and 2018. As the California Department of Insurance and later the feds moved to shut down the MEWA, though, prosecutors say Man Staffing changed its tactics and claimed to have obtained coverage through various PEOs owned and operated by Michael Walstad and Vincent Walstad.
“Defendants repeatedly violated Rule 4 by purporting to ‘purchase’ insurance from these entities (herein, the Walstad Entities), when the insurance coverage Defendants ‘purchased’ was insurance that covered only the Walstad Entities and their bona fide employees,” the complaint alleges.
Rule 4 is part of California’s Experience Rating Plan. “Relevant here, Rule 4 prohibits what is colloquially known as ‘staffing on staffing,’ i.e., when a staffing company (such as all corporate Defendants) illegally rents or ‘borrows’ the workers’ compensation insurance policy of another staffing company, and attempts to pass off any of its employee injuries as occurring under the other company’s insurance policy,” the DA maintains. “[T]ypically, the Walstad Entities provided Defendants with a workers’ compensation policy working number in the Walstad Entity’s own name and then supplied Defendants with a business-relationship explanation letter which purported to ‘explain’ the (illegal) business relationship between Defendants and the Walstad Entities. According to these explanation letters, of which District Attorney investigators obtained several copies, Defendants’ unspecified ‘working relationship’ with the Walstad Entities gave Defendants access to the workers’ compensation insurance obtained by the Walstad Entities. However, no such ‘working relationship’ is permitted under California law, nor is this arrangement a legal way to obtain workers’ compensation insurance.”
Investigators note that during six months in 2018, Man Staffing appeared to have legitimate coverage through another PEO – Vensure H.R. – that obtained a policy from State National Insurance Company.
The complaint alleges that the policy was cancelled after numerous attempts by Man Staffing to backdate a worker’s hire date, who had been injured on the job and had a workers’ comp claim. “[T]his conduct is considered criminal premium fraud, and it violates both Penal Code section 550 and Insurance Code section 11760,” the complaint notes.
But No Criminal Charges
The Ventura County District Attorney’s Office did not respond to questions as to why it didn’t pursue criminal charges in the case.
Ventura County has, however, received millions of dollars in funding to fight fraud from California Employers through the California Fraud Assessment Commission. Over the last four years, FAC has provided it with roughly $3.8 million to combat workers’ comp fraud.
Other periods of coverage found by investigators involved a policy for a single client of Man Staffing through United Wisconsin Insurance Company and Sunz Insurance. The complaint says this policy was terminated after three months and that Man never obtained a replacement policy. The other period during which it was allegedly covered was 2023, through The Bridge Group PEO and Key Risk Insurance Company. The complaint says Key Risk canceled the policy after a month due to nonpayment.
Stipulated Terms
The $650,000 that Man Staffing agreed to pay to settle the case includes $350,000 payable to the Ventura County District Attorney’s office as an initial payment of civil penalties pursuant to Business & Professions Code section 17206, which is part of California’s Unfair Competition statute. Only $150,000 was directed to the Uninsured Employers Benefits Trust Fund (UEBTF) operated by the Department of Industrial Relations’ Division of Workers’ Compensation.
Man Staffing then agreed to pay the remaining civil penalties at a rate of $25,000 per month. Any late or missed payments would result in the imposition of $125,000 in civil penalties, currently stayed.
The deal also requires the company to obtain valid workers’ compensation insurance from a California-licensed workers’ compensation insurer. Failing to do so would result in the forfeiture of the $75,111 that the DA’s office seized from the company.
The defendants also agreed to an injunction that bars them from engaging in any unlawful business practices that would violate the UCL. They are also permanently enjoined and prohibited from violating Rule 4. They can never again work “with any professional employer organization, insurance broker, third-party benefits administrator, or any other insurance-procuring entity which purports to source or sell workers’ compensation insurance coverage, unless Defendants verify that such entity is licensed to do business in California, if required by California law.” The same prohibition applies to any MEWA or similar entity.
The stipulation also names a baker’s dozen of individuals and entities that the company is permanently enjoined and prohibited “from conducting any business transaction, engaging in any business practice involving, contracting with, utilizing the services of, or working in any way with, the following individuals, entities, or their successors and assigns,” the agreement holds. The named individuals and entities are:
- Marcus Assay
- Michael Anthony Walstad
- Vincent “Vince” Walstad
- James Toporcer
- Kristan Castenada
- Giovanni Zamora
- Kalifornia Business Staffing (aka“KBS”)
- Employer’s Outsourcing, Inc.
- Simplify HR
- Prime Administrators/Prime Administrators Fresno
- Firestone Labor Union (aka “Affirmative Benefits”)
- American Labor Alliance (aka “CompOne USA”)
- The Bridge Group
Jocelyn Sicat of Sicat Law represented the defendants in the case. Erik Nasarenko is the Ventura County District Attorney who settled the case civilly.
Copies of the DA’s complaint and final judgment are available in our Resources section or by clicking here.